Eurozone deflation fears subside

Consumer prices across the eurozone dropped by only 0.1 percent in the year to March, official data showed Tuesday, further easing fears over sustained deflation in the 19-member bloc.

The modest decline was up from February's 0.3-percent drop, with low energy costs still impacting the cost of living, according to the European Union's statistics agency Eurostat.

The plunge in energy prices has slowed, however, falling to 5.8 percent this month compared to a 7.9 percent decrease in February.

Negative inflation rates since December have raised concerns the eurozone would suffer a crippling stretch of deflation, with sustained falls in prices weighing on economic activity.

But EU officials have been adamant in saying the eurozone is not in deflation, arguing the drop in consumer prices have been driven by external factors, like oil and food prices, rather than an across-the-board drop in price levels.

Eurostat also said on Tuesday eurozone unemployment fell to 11.3 percent in February from 11.4 percent the previous month.

el/ng (AP, dpa, AFP)