Euro zone industrial output plummeted by a record 18.4 per cent year-on-year in February and inflation halved to an all-time low in March, underlining the depth of recession and adding to pressure for ECB policy easing.
Production in the 16 countries using the euro fell 2.3 per cent against January, the sixth straight month of decline, while the annual drop was the deepest since records began in 1990, the European Union's statistics office said today.
Economists polled by Reuters had expected a 2.4 per cent monthly fall and a 17.6 per cent annual drop.
Eurostat also said euro zone inflation in March was 0.4 per cent month-on-month, confirming its end-March estimate that prices in the area rose 0.6 percent year-on-year - the lowest rate since records started in 1996.
Prices were already falling year-on-year in the Republic of Ireland, Portugal, Luxembourg and Spain, data showed.
The European Central Bank wants inflation to be below, but close to, 2 per cent. Several ECB officials have said the bank would take action to prevent the gauge from falling too far below target, even though they saw no risk of deflation.
The ECB has said that for deflation to exist there must not only be a protracted period of negative inflation, but also negative inflation expectations, which would make consumers hold back purchases.
The bank meets on interest rates on May 7th and has hinted it may cut interest rates by 25 basis points to 1 per cent as well as consider other, unconventional ways of policy easing, which markets expect could take the form of corporate debt purchases or the lengthening of the maturity of refinancing operations.
The March inflation fall was fuelled mainly by lower energy costs as prices fell 1.2 per cent month-on-month for an 8.1 per cent year-on-year drop. Food, alcohol and tobacco prices fell 0.1 per cent on a monthly basis for a 1.9 per cent annual gain.
Core inflation, which excludes unprocessed food and energy costs and is closely watched by the ECB in policy decisions, was 0.6 per cent month-on-month and 1.5 per cent year-on-year.
Reuters