Eurozone inflation fell to 0.3 percent in August, official data showed on Friday, meaning that deflation is at the door and raising pressure on the European Central Bank to open up the cash floodgates.
The latest fall takes the rate down from 0.4 percent in July and 1.3 percent a year ago, and far below the ECB`s target of just under 2.0 percent.
The latest twist downwards, against a background of worryingly sluggish eurozone growth, was driven by falls in the prices of food and energy, the European Union`s statistical arm Eurostat, which published the figure, said.
Eurostat also reported that the eurozone unemployment rate in July was steady at 11.5 percent from the level in June.
This means that the rate is running at the lowest level since September 2012, and marks a decline from 11.9 percent in July last year.
But the rate is high, and exceptionally high in some countries such as Spain, Greece and Italy, and is also running at a new record high level in France, which has just been hit by a major political crisis over slow growth, high unemployment and the need for deep reforms.
In July, there were 18.4 million people unemployed in the 18-member countries of the eurozone. However, this was 725,000 fewer than in July last year.
The figures, mainly the inflation data, increase evidence that the eurozone is flirting with deflation, a climate of falling prices which can cause businesses and consumers to delay purchases, further reducing demand and prices and pushing up unemployment, a spiral which central banks find extremely difficult to counter.
The ECB, which meets on Thursday, has already lowered interest rates to record low levels, even going as far as a negative rate.
The bank is widely considered to be moving towards quantitative easing, a radical policy of buying securities on a big scale to inject cash into the economy in the hope this will raise activity, push down the euro and therefore push up prices.
A member of the ECB`s policy council, Ewald Nowotny, governor of the Austrian central bank, told an economic forum late on Thursday that he was "worried" about the outlook for eurozone growth, and that eurozone recovery was slower than the ECB had expected, his spokesman recounted to AFP on Friday.
