European consumer prices fell by the most in almost 13 years in July after energy costs declined and unemployment rose to the highest in a decade.
Prices in the euro region dropped 0.6 per cent from a year earlier, the most since the data were first compiled in 1996, Eurostat, the European Union statistics office said today.
As consumers and companies reduce spending to weather the worst recession in more than 60 years, inflation is also being pushed lower by a 50 per cent drop in the price of crude oil over the last year.
The European Central Bank aims for inflation to be just under 2 per cent and ECB president Jean-Claude Trichet has said he expects inflation to "temporarily remain negative" before turning positive by year end.
While the central bank says mid-to long-term price expectations are "anchored," a European Commission measure of those expectations fell in July to the lowest since at least 1990, a report showed yesterday.
Separate figures out today show that unemployment in the 16 countries which use the euro rose to a 10-year high of 9.4 per cent in June.
Agencies