Eurozone inflation eases, jobs picture still grim

Eurozone inflation fell more than expected in January. That implies businesses are cutting their prices to keep people spending amid the weak economy and record unemployment. In the 17 countries using the euro, consumer price inflation fell to 2.0 percent compared to January one year ago. That was the lowest level since November 2010 and well down from a 3.0 percent peak in September 2011. In December it was 2.2 percent. For the past year, inflation has been driven by oil prices and tax increases, but stripping out those factors, annual consumer price rises are around 1.0 percent, reflecting the weakness of the economy. Lower inflation gives the European Central Bank room to cut interest rates again to stimulate the economy, which has slipped into its second recession since 2009. The ECB’s governing council kept rates at 0.75 percent at its January meeting and will discuss rate policy again on February 7. The decision to keep policy on hold was unanimous last month,but economists are still divided over the ECB’s future moves. Growing dole queues At the same time eurozone unemployment remains at record levels. It was 11.7 percent of the workforce in December – that is 18.7 million people without jobs in the single currency area The region divide continues with Austria, Germany, Luxembourg and the Netherlands having the lowest rates, Greece and Spain the highest. Unemployment held steady at just 5.3 percent in Germany, the eurozone’s biggest economy, however but rose again in Portugal and Cyprus, to 16.5 percent and 14.7 percent respectively. Greece holds the record in both the euro zone and the wider European Union for worklessness, with a rate of 26.8 percent in October, the latest figure available. The unemployment rate in Spain fell slightly to 26.1 percent in December.