(MENAFN- AFP) Eurozone consumer prices fell by a record 0.6 percent in January, confirming deflation could be taking hold for the long term, EU data showed Wednesday.
The drop from minus 0.2 percent in December appears to back the European Central Bank's decision last week to launch a bond-buying spree to drive up prices.
Plummeting world oil prices were largely to blame for the fall in the 19-country eurozone, already beset by weak economic growth and high unemployment, the EU's data agency Eurostat said.
The -0.6 inflation rate matches the same record drop in prices the eurozone set in July 2009 at the worst of the global financial crisis.
But there was better news on the unemployment front as the jobless rate fell to at 11.4 percent in December, its lowest level since August 2012.
"Falling prices today and alarmingly pessimistic expectations of where prices are heading in the future proves beyond all reasonable doubt it was high time to act,'' Richard Barwell, senior European economist at Royal Bank of Scotland Group told Bloomberg.
But he added it was "risky starting QE this late in the deflation game."
With fears of deflation increasing, the ECB last week finally decided to embark on a quantitative easing programme involving the purchase of 1.14 trillion euros ($1.29-trillion) in sovereign bonds.
In a deflationary spiral, businesses and households delay purchases, throttling demand, triggering recession and causing companies to lay off workers.
The move comes as the eurozone faces renewed worries from Greece, after the anti-austerity Syriza party came to power in elections with a promise to renegotiate Greece's foreign debts.
- North-south divide -
Energy prices in the eurozone, which added Lithuania on January 1, sank a huge 8.9 percent in December, greater than an already steep fall of 6.3 percent a month earlier.
Oil prices have plummeted in recent weeks, as OPEC maintains its production levels despite weak demand.
The fall in unemployment to 11.4 percent from 11.5 percent in November and 11.8 percent a year before gave some cheer, even if it still higher than before the eurozone debt crisis.
There were 18.13 million unemployed across the eurozone in December, 157,000 less than in November and 693,000 less than a year before.
But sharp contrasts between northern and southern EU countries remained.
Unemployment in Germany remained at a super low 4.8 percent, with Austria just behind with 4.9 percent.
But debt crisis countries fared far worse, with Greece at 25.8 percent in October, the latest data available, and Spain at 23.7 percent.
However, in heavily indebted Italy unemployment fell to 12.9 percent from a record high of 13.3 percent, offering a much needed sign of recovery to reform minded Prime Minister Matteo Renzi.
At 23 percent in December, youth unemployment remained a huge problem in the eurozone, though lower than the 23.9 percent of a year ago.
Last month, Germany had the fewest job seekers under the age of 25, at 7.2 percent.
Youth unemployment in Spain stood at a huge 51.4 percent, 50.6 percent in Greece and 42 percent in Italy.
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