BRUSSELS: The eurozone’s consumer price downturn eased and jobless figures picked up slightly Monday but the modest improvements were not enough to dispel all fears of a deflationary spiral.

Analysts said the figures were welcome although the European Central Bank will still have to pull out all the stops to prevent the economy stalling as oil prices continue to fall sharply, stoking the deflation threat.

Consumer prices in the 19-nation eurozone were down 0.3 per cent in February, less than the drop of 0.6pc in January when tumbling energy prices slashed the cost of living, the EU statistics agency Eurostat said.

Energy prices alone were down 7.9pc, slowing only slightly after a fall of 9.3pc in January, Eurostat said.

The jobless figures were modestly encouraging, with unemployment down to 11.2pc from 11.3pc in December to hit its lowest level since April 2012.

Howard Archer of IHS Global Insight said the two reports were “a double dose of good news for the eurozone.”

Improving price data “may dilute fears that pervasive deflation could become entrenched in the eurozone with long-term debilitating growth effects,” Archer said.

For the moment, lower prices appeared to be giving consumer demand a boost with “little evidence that eurozone consumers are delaying purchases,” he added.

STALLING ECONOMY: The eurozone economy has recovered only slowly from its prolonged debt crisis and virtually stalled in the third quarter of 2014 with growth of just 0.2pc, followed by a slightly better 0.3pc in the fourth.

Analysts feared especially that falling prices would see consumers put off purchases to buy goods when they are cheaper.

Published in Dawn March 3rd , 2015

On a mobile phone? Get the Dawn Mobile App: Apple Store | Google Play