Eurozone inflation down, jobless steady
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February 01 2013, 10:28PM
BRUSSELS, Feb 1 AFP - The eurozone crowned a week of steadily improving economic data on Friday with inflation almost down to the European Central Bank's (ECB) medium-term target, falling to 2.0 per cent in January after overshooting for more than two years, EU data showed.
Marking good news for leaders of the 17-state currency area preparing for next week's European Union summit, the drop from 2.2 per cent in December took the measure of annual price rises to the lowest level since 1.9 per cent in November 2010.
Separately, chronic and rising unemployment across the eurozone appeared to stabilise in December at a rate of 11.7 per cent.
And the European Central Bank said Friday that 27 eurozone banks will repay early 3.48 billion euros ($A4.56 billion) of ultra-cheap three-year loans next week.
Under emergency liquidity measures, known as long-term refinancing operations or LTROs, made available to banks in December 2011, the ECB gave banks the option of repaying any part of the money after just one year.
Already this week 278 banks repaid 137.16 billion euros of the LTROs.
However, the latest EU data still showed almost 19 million people without work in what analysts warned remains a major challenge to political leaders struggling to generate meaningful growth.
The ECB has established a medium-term inflation target of below, but close to, 2.0 per cent.
The Eurostat data agency's flash estimate approached that threshold owing to easing pressure on energy prices, which rose by 3.9 per cent in January, down from 5.2 per cent in December.
Food, alcohol and tobacco inflation was also stable, at 3.2 per cent, with slight drops in price rises for services (1.7 per cent compared with 1.8 per cent in December) and non-energy industrial goods (0.8 per cent compared with 1.0 per cent in December).
Eurozone inflation has been falling since August and benchmark Germany posted a rate of 2.0 per cent in December,although major markets in Italy and Spain each still posted rates well above the eurozone average.
Analyst Martin van Vliet of ING Bank said the data suggests that inflation "is not a threat in the foreseeable future" with the eurozone rate "set to continue its gradual descent, with slower energy price inflation expected to push the headline rate well below two per cent around the middle of this year".
The unemployment drag on the economy is a contributor, Eurostat putting the unemployment rate at 11.7 per cent, the same level as in November, after revising that month's figure down from 11.8 per cent.
It still amounted to a 20th rise in a row, with the out-of-work numbers for the full 27-member EU, which includes countries such as Britain and Poland, just a little less than 26 million.
Compared with figures a year earlier, the eurozone has shed 1.796 million jobs.
Divergences in terms of economic performance within the bloc also remain pronounced, the lowest unemployment rates again recorded in the the wealthier north, with Austria on 4.3 per cent, Germany and Luxembourg each on 5.3 per cent and the Netherlands on 5.8 per cent.
Greece and Spain continue to log by far the highest rates, at 26.8 per cent in October and 26.1 per cent in December, respectively.
Using seasonally-adjusted Eurostat calculations for comparative purposes with major international rivals, in December 2012, the unemployment rate in the United States was 7.8 per cent. In Japan it was 4.1 per cent in November 2012.