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November 17, 2009

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Eurozone consumer prices fall by 0.1%

CONSUMER prices in the 16 countries that use the euro fell by 0.1 percent in the year to October, official figures confirmed yesterday.

Eurostat, the Europe Union's statistics office, kept the rate unchanged from its preliminary estimate, in line with market expectations.

October's decline was the fifth in a row. In the year to September, prices fell by 0.3 percent. Though falling prices may be good for consumers, it is a sign of just how shaky demand remains.

Of the 16 countries using the euro, Ireland saw prices fall the most, by 2.8 percent. Greece saw the biggest price rises, at 1.2 percent.

Inflation is expected to turn positive in the months ahead as last year's sharp falls in energy prices fall out of the annual comparison and growth returns - figures last week confirmed that the eurozone returned to growth in the third quarter of 2009.

However, few analysts expect the European Central Bank to start raising borrowing costs anytime soon. The ECB has cut its benchmark rate to a record low of 1 percent as price pressures dwindled during the recession.

In the 27-country EU as a whole, consumer prices rose by 0.5 percent in the year to October, up from 0.3 percent in September.

The EU's rate was markedly higher than in the eurozone mainly because inflation rates remain elevated in some Eastern European countries.


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