Jan 30, 2015 5:24 AM

Eurozone prices plunge 0.6 pct amid weak growth, cheap oil

The Associated Press

FRANKFURT, Germany (AP) Falling oil prices and a weak economy have sent prices in the eurozone even lower ahead of the start of a 1 trillion euro ($1.1 trillion) stimulus effort by the European Central Bank.

Consumer prices fell 0.6 percent in the 12 months to January, accelerating the 0.2 percent annual drop from December.

Friday's report by the Eurostat statistics agency showed that the core inflation rate, which strips out volatile food and energy prices, was plus 0.5 percent, down from 0.7 percent the month before.

Low oil plays a big role in falling consumer prices. But they are also a sign of the deep economic malaise afflicting the 19 countries that share the euro currency.

The European Central Bank is readying a massive 1 trillion euro stimulus program to try to raise inflation close to its goal of 2 percent and to get the economy moving. The ECB plans to buy 60 billion euros per month in government and private-sector bonds using newly printed money, starting in March. That is aimed at driving down borrowing rates. It should also lift inflation simply by increasing the number of euros circulating in the economy.

Meanwhile, jobless figures showed a slight improvement in December, with the unemployment rate falling to 11.4 percent from 11.5 percent the month before. The number of unemployed people fell by 157,000 in the eurozone.

The figures showed a wide diversity between countries. Germany, the eurozone's biggest economy, had a jobless rate of only 4.8 percent. Greece, still recovering from a crisis over too much government debt, had the highest at 25.8 percent. Spain, working off a debt crisis that involved a real estate boom and bust, had a jobless rate of 23.7 percent.

Greece's new government has rejected the budget austerity course forced on the country as a condition of getting international bailout loans. But creditor countries led by Germany are insisting that it stick with its promises to restrain government spending and public jobs.


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