A sharp drop in energy prices pulled January’s euro zone consumer prices to levels last seen during the global financial crisis, with only tiny Malta and Austria escaping deflation.

On an annual basis, prices in the 19 countries using the single currency were 0.6 per cent lower than a year earlier, the EU's statistics office Eurostat said on Tuesday, confirming its earlier flash estimate.

Deflation was deepest in Greece in January, followed by Spain, while almost all euro zone countries had negative inflation rates, hurt by the biggest drop in energy prices since September 2009.

Back then, the euro zone was suffering from the financial crisis that morphed into the euro zone’s debt crisis. Inflation was negative from June to October 2009.

January 2015’s 0.6 per cent decline matched the lowest figure during that period, in July 2009. Oil prices have more than halved since June, with Brent falling towards $58 a barrel on Tuesday ahead of key industry data expected to show further builds in US inventories due to heavy over-supply. That was most keenly felt in heating oil in the euro zone, which fell 26.8 per cent in January on an annual basis, while fuels for transport fell 15.8 per cent.

Core inflation, which excludes volatile energy and unprocessed food prices, dipped to 0.6 per cent in January from 0.7 per cent for the previous three months. That figure was revised from an earlier 0.5 per cent reading.

Headline inflation has also been in what the European Central Bank calls the 'danger zone' below 1 per cent since October 2013. The ECB aims to keep inflation just under 2 per cent over the medium term and the risk of sustained deflation led it last month to launch a €1.1 trillion quantitative easing programme of government-bond buying. The euro zone's central bank plans to purchase sovereign debt from March this year until September 2016 releasing €60 billion a month into the economy.

Reuters