Euro Area Inflation Falls

European consumer prices declined for a fifth month in October as rising unemployment discouraged household spending.

Prices in the 16-nation euro region declined 0.1 percent from a year earlier after falling 0.3 percent in September, the European Union statistics office said. In the month, consumer prices rose 0.2 percent.

European companies have been forced to cut prices and eliminate jobs to survive the worst global recession in more than six decades. While the region’s economy returned to growth in the third quarter, rising unemployment has undermined consumer spending. European Central Bank President Jean-Claude Trichet said on Nov. 5 that price and cost developments will remain subdued” in 2010 on sluggish” demand.

Global governments have stepped up stimulus measures and central banks have trimmed borrowing costs to revive spending. The euro-area economy expanded 0.4 percent in the third quarter after shrinking 0.2 percent in the previous three-month period, ending the deepest slump since World War II.

Prices of food declined 1.5 percent in the year and housing costs fell 1.6 percent, today’s report showed. The cost of transport was 2 percent cheaper in the year, the statistics office said. Core inflation, excluding volatile goods such as energy, rose 1.2 percent from a year earlier.

Euro Area Inflation Falls, Bloomberg
11/16/2009 9:14:42 AM