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Deflation hits eurozone as prices fall 0.2% in December Deflation hits eurozone as energy prices fall
(30 minutes later)
Inflation in the eurozone has turned negative, official figures have shown, with prices in December 0.2% lower than the same month a year earlier.Inflation in the eurozone has turned negative, official figures have shown, with prices in December 0.2% lower than the same month a year earlier.
The tip into deflation adds pressure on the European Central Bank to take further action to stimulate the bloc's economy. The tip into deflation adds pressure on the European Central Bank (ECB) to take further action to stimulate the bloc's economy.
The bank's inflation target is below but close to 2%.The bank's inflation target is below but close to 2%.
The fall was driven mainly by lower energy costs and the plunging price of oil. The fall was driven mainly by lower energy costs due to the plunging price of oil.
Energy prices in December were 6.3% lower than a year earlier. Energy prices in December were 6.3% lower than a year earlier. If energy prices are excluded, December's inflation rate for the eurozone was 0.6%, the same as in November.
If energy prices are excluded, December's inflation rate for the eurozone was 0.6%, the same as in November.
Prices for food, alcohol and tobacco were estimated to be unchanged from a year earlier, after rising 0.5% in November.Prices for food, alcohol and tobacco were estimated to be unchanged from a year earlier, after rising 0.5% in November.
Prices for services, which had held steady in November, are estimated to have risen 1.2% compared with December 2013.Prices for services, which had held steady in November, are estimated to have risen 1.2% compared with December 2013.
It is the first time the eurozone has experienced deflation since the depths of the financial crisis in 2009.It is the first time the eurozone has experienced deflation since the depths of the financial crisis in 2009.
The estimate from Eurostat, the statistical office of the European Union, will be updated later in the month.The estimate from Eurostat, the statistical office of the European Union, will be updated later in the month.
Separately, Eurostat reported that unemployment remained at 11.5% in November, unchanged from October. 'Policy failure'
Howard Archer, chief European economist at IHS Global Insight called the inflation data "dire news for the ECB".
The central bank is increasingly expected to launch a new round of economic stimulus measures, or quantitative easing (QE), and the latest numbers will cement expectations. However, Germany reportedly opposes more QE.
James Ashley, chief European economist at Capital Economics, said Wednesday's data was a footnote to the wider economic picture.
Arguments over whether inflation was just above or below 0%, and whether the tumbling oil was to blame, were "specious," he said.
"The far more important question is why inflation is anywhere near 0% in the first place: in our view, the inconvenient truth for policymakers is that, in large part, that is a reflection of the failure of policy, both fiscal and monetary."
Separately, Eurostat reported that the unemployment rate in the eurozone remained at 11.5% in November, unchanged from October.