EU slower December inflation could be followed by more interest rate cuts

Thursday, January 5th 2012 - 05:08 UTC

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The Euro zone inflation was down to 2.8%

Euro zone inflation eased from last year's peaks of 3.0% in December, the first sign of a fall in price growth this year that analysts expect will create room for more interest rate cuts to help the weakening economy.

The European Union's Statistics Office (Eurostat) estimated that consumer prices in the 17 countries sharing the Euro rose 2.8% year-on-year in December down from 3.0 % year-on-year rises in November, October and September.

No detailed break-down of the numbers is available with the Eurostat estimate, but economists said the slower price growth was likely a result of lower energy prices.

The European Central Bank cut its main interest rate back to a record low of 1% on December 8 to try to boost the economy as inflation pressures subside.