The ECB strives to keep annual inflation close to but less than 2.0 per cent, but the rate has not been below that level since August 2007 amid an oil and commodities prices boom, which has deflated over the last six months. --PHOTO: ASSOCIATED PRESS
BRUSSELS - INFLATION in the euro countries slumped in December to 1.6 per cent - the lowest in over two years - from 2.1 per cent in November, according to an estimate on Tuesday from EU's Eurostat data agency.
The drop brought eurozone inflation to the lowest level since October 2006 and clears the way for further interest rate cuts from the European Central Bank.
The ECB strives to keep annual inflation close to but less than 2.0 per cent, but the rate has not been below that level since August 2007 amid an oil and commodities prices boom, which has deflated over the last six months.
After hitting a record high of 4.0 per cent in June and July, eurozone inflation has fallen sharply as oil and other commodity prices collapsed in the face of a deep economic downturn.
The drop in inflation has paved the way for a series of interest rate cuts by the ECB, which slashed its main rate last month by a record three quarters of a percentage point to 2.50 per cent.
The eurozone counts 16 members since Slovakia adopted the currency at the beginning of the month. -- AFP
