Annual inflation in the eurozone fell to a more-than-three-year low in April, preliminary data released on Tuesday showed, likely adding to the pressure upon the European Central Bank to cut interest rates.
The European Union’s statistic office, Eurostat, said inflation dropped to 1.2 per cent in April from 1.7 per cent in March as economic activity slowed and energy costs slumped.
Annual consumer prices now stand at their lowest level since February 2010. Analysts had expected inflation would edge down to 1.6 per cent this month.
The 0.5-percentage-point decline was the biggest fall in inflation since July 2009, Eurostat said.
This month’s drop pushed consumer prices further below the ECB’s target of an annual rate of close to, but below, 2 per cent.
Many analysts expect the ECB will cut borrowing costs by 25 basis points, possibly as early as its meeting on Thursday, in a bid to boost economic confidence in the eurozone.
The ECB’s benchmark refinancing rate currently stands at 0.75 per cent.
The release of the inflation data followed the publication of a string of downbeat economic indicators for the 17-member currency bloc. The flow of bad news has raised concerns that the region could be facing a protracted recession.
A key factor driving the inflation rate down was a dramatic fall in the cost of energy. Energy costs rose by 1.7 per cent in March, but dropped by 0.4 per cent in April.