Deflation threat putting pressure on eurozone

Europe faces a threat of deflation, which it seems unlikely to be willing to fight.

Core inflation in the euro zone fell sharply in October to just 0.8% a year, the lowest since early 2010 and a level which sets the red deflation light flashing.

Deflation, or even low inflation, is particularly bad news for Europe, whose particular burden is too much debt. Inflation eats away at the real value of debt, thus making it easier to bear. Deflation does the opposite.