* Euro zone joblessness at 12.2 pct for two months in a row
* 60,000 Europeans lose jobs in September compared with Aug
* Inflation hits 4-yr lows, well below ECB's target
* Data raises chances of ECB rate cut
By Martin Santa
BRUSSELS, Oct 31 (Reuters) - Euro zone inflation dropped
sharply to nearly four-year lows in October and unemployment
stuck at record highs in September, increasing pressure on the
European Central Bank to do more to protect economic recovery.
Inflation fell to 0.7 percent year-on-year in October - the
lowest reading since November 2009 - a flash estimate from the
European Union's statistics office showed on Thursday. It was
lower than any forecast from economists in a Reuters poll.
The inflation rate dropped below 1 percent for the first
time since February 2010. Analysts had expected the inflation
rate to be unchanged at 1.1 percent in October.
The ECB, which meets nect Thursday, wants to keep inflation
below, but close to 2 percent over the medium term. Its main
refinancing rate is now already at a record low of 0.5 percent.
"We see December as the most probable timing for a 25 basis
points cut in the refi rate, in tandem with another round of low
staff projections for inflation, including for 2015," Ken
Wattret, chief euro zone market economist at BNP Paribas said.
The 9.5 trillion euro economy of 17 countries sharing the
single currency returned to growth in the second quarter but
fiscal consolidation, high unemployment and weak business and
consumer confidence are preventing a more robust rebound.
Adding to factors in favour of a rate cut was the strength
of the euro, which has been appreciating since early September,
although on the day the inflation data and increased chances of
a rate cut sent to euro lower to 1.3660 against the dollar from
Eurostat said that costs of food, alcohol and tobacco
products rose by 1.9 percent, but at the same time prices of
energy fell 1.7 percent year on year.
Excludes prices of energy, food alcohol and tobacco,
inflation slowed to 1.1 percent year-on-year from 1.4 percent in
September, Eurostat said.
RECORD HIGH UNEMPLOYMENT
Price growth is also kept in check by record high
unemployment. Eurostat previously reported that the number of
people out of work fell to 12.0 percent of the workforce in
August, raising hopes of a turnaround in the labour market.
But on Thursday it revised the August number up to 12.2
percent and said the rate had not changed in September.
In absolute figures, the number of people without work even
increased by 60,000 in September against August to 19.447
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.
Youth jobless rates in European Union countries like Spain,
Greece and Croatia are above 50 percent. They are below 10
percent only in Germany and Austria.
European Commissioner for Employment Laszlo Andor, in
reaction to the September data, said the rate was unacceptably
high and continued to undermine a more robust economic recovery.
The unemployment rate in Germany edged lower 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 the fight against high unemployment
one of key priorities.
The ECB also considers the unemployment rate unacceptably
high as Europe risks losing a generation of young workers if it
fails to address the problem and revive growth.
"The latest figures put a dent in hopes that the labour
market may have reached a turning point," Ben May, European
economist at Capital Economics said.
- Budget, Tax & Economy
- European Union
- inflation rate