Euro zone October inflation at four-year lows, September jobless at record high

Reuters

BRUSSELS (Reuters) - Euro zone inflation unexpectedly dropped to a nearly four-year lows in October and unemployment stood at a record high in September, increasing pressure on the European Central Bank to further cut interest rates.

Inflation in euro zone fell to 0.7 percent year-on-year in October as energy costs fell 1.7 percent on the year, the lowest reading since November 2009.

The inflation rate dropped below 1 percent for the first time since February 2010, a flash estimate from the European Union's Statistics Office showed.

Analysts expected the inflation rate to be flat at 1.1 percent in October.

The very low inflation rate increases the chances that the ECB might consider another interest rate cut and the euro fell on the news to 1.3665 against the dollar from 1.3690.

Costs of food, alcohol and tobacco products rose by 1.9 percent. Core inflation, which excludes prices of energy, food alcohol and tobacco slowed to 1.1 percent year-on-year from 1.4 percent in September.

The jobless rate in 17 countries sharing the euro was flat at 12.2 percent against an upwardly revised August figure, but 60,000 more Europeans were unemployed on the month, Eurostat said.

The global financial crisis, followed by European sovereign debt crisis wiped out hundreds of thousands of jobs over the past four years and no swift turnaround is in sight as job problems in Europe are of structural and long-term nature.

Young Europeans, aged 15-24, are the ones most affected with youth jobless rates in European Unions countries like Spain, Greece and Croatia above 50 percent. They are below 10 percent only in Germany and Austria.

The unemployment rate in Germany inched down to 5.2 percent after being flat for three consecutive months, while the second largest economy France and third largest Italy registered a modest increase in their jobless rates in September.

European leaders made fight against high unemployment one of key priorities.

The European Central Bank (ECB) considers the unemployment rate unacceptably high as Europe risks losing a generation of young workers it fails to address the problem and revive growth.

(Reporting by Martin Santa)

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