The Eurozone's Consumer Price Index (CPI) slowed down to an annual rate of 2.0 per cent in January from 2.2 per cent in December, according to Eurostat, the European Union's official statistics office.

A year earlier the rate was 2.7%.

Slower price growth was driven by energy and services. Nevertheless, the core rate, which excludes volatile items such as energy and food prices, also slowed down to 1.3% from 1.5% a month earlier.

The decline in price growth was broadbased as inflation fell in 23 EU members, remained stable in one, and rose in three. The lowest rates were registered in Greece (0.9%), Sweden (0.9%), and Ireland (1.9%) while the highest were in Hungary (5.4%), Estonia (4.1%), Romania and Slovakia (both 3.6%).

The data shows that inflation is in line with the European Central Bank's (ECB) inflation target. As prices continue to come down, they are also in line with the European Commission's forecast of 1.8% inflation for this year and 1.5% for 2014.

The ECB aims for inflation rates of below - but close to - 2.0% in order for the economy to fully reap the benefits of price stability.

While the data could help make an argument for monetary easing, the ECB is expected to keep its benckmark interest rate at 0.75% in next week's monetary policy meeting, according to a Bloomberg survey of economists.

JP

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