Eurozone deflation eases while unemployment falls

Food stall Image copyright Getty Images
Image caption Food and energy prices drove eurozone inflation higher in March

Deflation in the eurozone eased in March as the unemployment rate dipped slightly in February, figures show.

The EU's statistics office figures found consumer prices fell by 0.1% in March from a year earlier, as against a 0.3% fall last month.

The downward pressure on prices has come from the drop in energy costs, but which now appear to be levelling out.

The unemployment rate in the eurozone fell from 11.4% to 11.3% in February.

The total decline of 329,000 in the number of eurozone jobless in the three months to February is the largest three-month fall since the three months to April 2007.

The numbers suggest businesses are becoming more willing to step up hiring encouraged by very low oil prices, a markedly weaker euro and a major stimulus from the European Central Bank (ECB).

ECB's stimulus

In January the ECB announced a quantitative easing programme to purchase more than €1tn ($1.07tn, £730bn) in assets - pumping money into the banking system to boost the eurozone economy, and stave off deflation.

Despite the headline rate rising to -0.1%, core annual inflation - which excludes energy and food prices - continued to fall, dropping to 0.6% from 0.7% in February.

Jonathan Loynes, chief European economist at Capital Economics, said: "The latest data on eurozone inflation and unemployment do little to diminish the danger of a prolonged period of deflation in the currency union.

"The increase was driven entirely by higher food and energy inflation, no doubt partly reflecting the drop in the euro during the month."

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