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Eurozone September inflation unexpectedly revised down to 0.8%

Eurozone Photograph:( Reuters )

Reuters Brussels Oct 16, 2019, 03.19 PM (IST)

Eurozone inflation slowed in September by more than previously estimated to its slowest pace in nearly three years, the European Union statistics agency said on Wednesday, in a new warning on the state of the bloc's economy.

Eurostat said prices in the 19-country currency area grew by 0.8 per cent on the year, revising down its earlier estimate of a 0.9 per cent rate. That also defied the market consensus of a 0.9 per cent growth.

In a separate release, Eurostat said on Wednesday that the bloc's trade surplus with the rest of the world rose to $16.2 billion in August, from 11.9 billion the previous year, as euro zone's imports dropped more than its declining exports.

The revised inflation reading marked a more pronounced slowdown from the 1.0 per cent growth in August and was the lowest rate since November 2016 when prices grew by 0.6 per cent in the bloc.

The new drop is likely to raise new concerns on the state of the eurozone economy and could reignite the debate within the European Central Bank on how to pursue its goal of keeping inflation below, but close to 2 per cent over the medium term.

The revision was due to lower-than-expected inflation for industrial products, in a fresh worrying sign for the bloc's manufacturing sector which faces drops in output and a fall in confidence.

Prices for industrial goods, excluding energy, went up by a mere 0.2 per cent on the year in September, Eurostat said, revising its earlier estimate of a 0.3 per cent increase.

Energy prices were confirmed falling by 1.8 per cent, while inflation in the service sector, the largest in the bloc, rose by 1.5 per cent in line with previous estimates.

A narrower inflation indicator which strips out volatile energy and unprocessed food prices, and is monitored closely by the ECB for its policy decisions, rose to 1.2 per cent in September from 1.1 per cent in August, in line with Eurostat's earlier estimates released on October 1.

Excluding energy, food, alcohol and tobacco, inflation grew 1.0 per cent in September, Eurostat said, confirming its previous figures.

On the month, headline inflation grew 0.2 per cent in the bloc, also in line with earlier estimates.