BRUSSELS (dpa-AFX) - Eurozone inflation eased unexpectedly in September, driven by cheap food and energy prices, flash data from Eurostat showed Tuesday.
Inflation slowed to 0.9 percent in September from 1 percent in August. The rate was forecast to remain unchanged at 1 percent. This was the lowest inflation since November 2016, when the rate of price growth was 0.6 percent.
Price growth remained well below the European Central Bank's target of 'below, but close to 2 percent.'
Meanwhile, core inflation that excludes volatile energy, food and alcohol and tobacco, rose to a three-month high of 1 percent from 0.9 percent in August. The rate was in line with expectations.
The overall picture of underlying softness in core inflation should worry the European Central Bank as it could persist due to recession fears, Bert Colijn, an economist at ING, said.
Energy prices declined 1.8 percent annually after easing 0.6 percent. Price increase in food, alcohol and tobacco eased to 1.6 percent from 2.1 percent.
Non-energy industrial goods prices growth held steady at 0.3 percent. Meanwhile, services cost accelerated 1.5 percent after gaining 1.3 percent.
On a monthly basis, consumer prices gained 0.2 percent and core prices advanced 0.4 percent in September. Final data is due on October 16.
The outgoing European Central Bank President Mario Draghi had announced a slew of stimulus measures at his final policy session in September. The bank had reduced the deposit rate by 10 basis points to -0.50 percent.
The ECB staff had cut the euro area inflation forecast for this year to 1.2 percent from 1.3 percent and the outlook for next year was slashed to 1 percent from 1.4 percent.
The Purchasing Managers' survey data, released earlier on Tuesday, showed that the euro area manufacturing sector contracted at the fastest pace in nearly seven years as output, new orders and purchasing fell sharply in September.
The final manufacturing Purchasing Managers' Index dropped to 45.7 in September from 47.0 in August. The score was the lowest since October 2012.
The reading has remained below the neutral 50 for the eighth consecutive month, indicating contraction in the sector.
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