Euro zone inflation slowed more than expected in November as the impact of high oil prices wore off, data showed on today.
However, economists still expect another central bank rate rise despite a benign inflation outlook.
Consumer prices in the 12 countries using the euro fell 0.3 per cent month-on-month for a year-on-year rise of 2.3 per cent, the European Union's statistics office, Eurostat, said - down from a 2.5 per cent annual rate in October.
Economists polled by Reuters had expected prices would fall 0.2 per cent month-on-month for a year-on-year 2.4 per cent rise - Eurostat's initial estimate of annual inflation in November.
But economists still expect the European Central Bank, which targets medium-term inflation of below but close to 2.0 per cent, to raise interest rates by a quarter percentage point in February or March to 2.5 per cent, following the last quarter point rise on December 1st.
Real interest rates are now zero and the bank may want to raise them slightly amid signs of an economic recovery because it is concerned about very strong growth in household borrowing, which fuels property and equity prices, economists said.
Loans to euro zone households grew at a 9 per cent annual rate in October, the strongest pace since early 2000.
Although the ECB has repeatedly said it had not decided yet if it would need more rate rises to keep inflation on target, economists expect it will raise rates further because of mounting evidence of a pick-up in economic activity.