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Euro zone unemployment hits record, inflation eases

A huge euro logo stands in front of the headquarters of the European Central Bank (ECB) in Frankfurt.

RALPH ORLOWSKI/REUTERS

Euro zone inflation eased as expected in October thanks to slower growth of energy prices, but unemployment rose to new record highs in September, data from the European statistics office Eurostat showed on Wednesday.

Eurostat estimated consumer inflation in the 17 countries sharing the euro was 2.5 per cent year-on-year, down from 2.6 per cent in September, though still above the European Central Bank target of below, but close to 2 per cent.

Upward pressure came mainly from more expensive energy, the prices of which increased 7.8 per cent year-on-year in October, but more slowly than in September, when they were up 9.1 per cent year-on-year.

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The second biggest inflation contributor was food, which was up 3.2 per cent year-on-year, up from 2.9 per cent the month before.

Economists expect the European Central Bank to cut interest rates once more before the end of the year from the current record low of 0.75 per cent, to support the slowing economy which is likely to have sank into a recession in the third quarter.

Inflation pressures in the euro zone are low because unemployment is a record levels, rising to 11.6 per cent of the work force in September – the highest level for the 17 countries that now make up the euro zone since 1995.

Eurostat said 18.49 million people were without jobs in the euro area, up by 146,000 from the month before.

The highest unemployment rate was in Spain, where the number of jobless rose to 25.8 per cent of the work force in September from 25.5 per cent the month before. Among young Spaniards, under 25 years, unemployment rose to a staggering 54.2 per cent from 53.8 per cent.

Austria had the lowest unemployment rate of 4.4 per cent, followed closely by the euro zone's biggest economy, Germany, with 5.4 per cent.

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