(MENAFN– ecpulse) Euro area inflation retreated to 0.8 percent in December from 0.9 percent in November, coming in line with median forecast.
Consumer price index for the year ended December slipped to add to worries that deflation threats could hamper the recovery path in the euro region.
The core annual reading also slumped to 0.7 percent from the prior of 0.9 percent.
Other inflation data showed that annual PPI dropped 1.2 percent in November from a revised of -1.3 percent. On the month, the reading plunged 0.1 percent from a previous of -0.5 percent.
The main threat meanwhile comes from inflation data as over the past year the rate has plunged from 2.2 percent to 0.9 percent, taking steps away from the ECB’s target of 2 percent.
Deflation woes are the key reason that derived Draghi and his colleagues to slash the borrowing cost by 25 basis points on November 7, where ECB President Mario Draghi illustrated that the ECB still had room to act if needed.
The ECB foresees inflation dropping from an average of 1.4% in 2013 to 1.1% in this year, while picking up modestly to 1.3% next year.
Later in the week, eyes will focus on the ECB’s first monetary decision this year amid expectations of seeing a hold in interest rate.
"At the moment we don`t see a need for any urgent action." There could be "no talk of deflation" in the euro zone, Draghi said last month.
Tomorrow, the German Federal Constitutional Court will announce a ruling regarding the constitutionality of the ECB`s OMT, in Karlsruhe, as some analysts see the OMT one of the key solutions that could thwart any deflationary pressures.
As of 10:08 GMT, the euro traded around 1.3620 versus the greenback after hitting a low of 1.3609 and a high of 1.3634.
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