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Deflation fears amid fall in consumer prices

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Irish shares were down yesterday after ECB president Mario Draghi's comments

Irish shares were down yesterday after ECB president Mario Draghi's comments

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Irish shares were down yesterday after ECB president Mario Draghi's comments

Consumer prices fell in January, increasing fears of deflation in the eurozone.

Eurozone consumer prices fell at their fastest-ever pace on a monthly basis in January, dragged down by a slump in the cost of non-energy industrial goods. It keeps annual inflation well below the European Central Bank's target.

The inflation rate across the 18 countries sharing the euro dropped by 1.1pc last month when compared with December, keeping the annual inflation rate at 0.8pc for a second month in a row, the EU's statistics office Eurostat said.

The annual inflation rate was revised from 0.7pc, which Eurostat released in a flash estimate on January 31.

Economists polled by Reuters expected consumer price inflation to accelerate slightly to 0.9pc in January.

The annual rate was influenced by a 1.2pc decline in the prices of energy, while the monthly decline was hit by a 3.9pc fall in prices of non-energy industrial goods and a 0.4pc drop in the price of services.

The ECB, which cut its key interest rate to a record low of 0.25pc in November, is expected to stay put until mid-2015 unless money market rates rise and the euro strengthens.

Although ECB president Mario Draghi said the central bank had not changed interest rates this month because of the need to have more information about the economic recovery, markets are still on alert for a move in March.

In January, Greece and Cyprus were stuck in deflation. Only Estonia, Latvia and Slovakia saw consumer prices rising month-on-month in January.

Eurostat will publish the eurozone's February inflation flash estimate on Friday. (Reuters)

Irish Independent