Inflation falls, unemployment still increases

Eurozone 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% year-on-year in October (the lowest reading since Nov 2009) a flash estimate from the EU’s statistics office showed yesterday. The inflation rate dropped below 1% for the first time since Feb 2010. Analysts expected inflation to be unchanged at 1.1% in October.

The ECB, which meets on Thursday, wants to keep inflation below, but close to 2% over the medium term. Its main refinancing rate is already at a record low of 0.5%.