Cheaper food and fuel pulled down the euro zone consumer price index in October for a fifth month running in annual terms, data showed today, confirming earlier estimates.
Prices in the 16-country area rose 0.2 per cent month-on-month but dipped 0.1 per cent year-on-year, European Union statistics agency Eurostat said.
Economists polled by Reuters had on average expected 0.3 per cent monthly inflation after Eurostat on October 30th estimated the annual fall to be 0.1 per cent. They also expect prices to start growing year-on-year in November.
In year-on-year terms, fuel for transport, gas, heating oil and food had the biggest downward impact on the index. Month-on -month, it was petrol and food.
Core inflation, which strips out volatile food and energy prices, was 0.3 percent on the month and 1.0 per cent year-on-year, the latter down from 1.1 per cent in September and 1.2 per cent in August.
The European Central Bank wants inflation to be just below 2 per cent over the medium term and has kept interest rates unchanged at a record low of 1 per cent since May. It watches the core number closely for signs of inflationary pressure.
Economists expect that despite signs of economic recovery, the ECB will keep interest rates unchanged until late in 2010 because inflation is low and inflation expectations are anchored at the ECB's price stability target.
The Eurostat data showed energy prices fell 0.2 per cent on the month and 8.5 per cent year-on-year. Food prices were flat against September and 1.5 per cent lower than a year before.