Deflation in the eurozone eased in March, official data showed Tuesday, reducing concerns that the European economy faces a dangerous spiral after four straight months of falling consumer prices. The threat of deflation in the eurozone remains a global concern, with fears that a huge bond-buying spree by the European Central Bank came too late to fight off the negative effects of falling prices.
But prices in the 19-nation single currency bloc were down 0.1 percent in March, less than the drop of 0.3 percent in February with low energy costs still impacting the cost of living, the EU statistics agency Eurostat said.
Unemployment also slipped to 11.3 percent in February, down from a revised 11.4 percent in January and 11.8 percent a year before in a further positive sign.
"Overall, the data will likely dilute fears that deflation could become entrenched in the eurozone with long-term debilitating growth effects," said Howard Archer, European Economist at IHS Global Insight.
"In fact, it may not be long before the markets start seriously questioning whether the ECB will continue to fully enact its Quantitative Easing programme all the way through to September 2016," he said.
Prices first fell into negative territory in December with a -0.2 figure and hit -0.6 percent in January. But the easing to -0.3 percent in February and the further weakening in March will be welcomed by the ECB.
However, after stripping out volatile energy and food prices, so-called core inflation still fell to 0.6 percent from 0.7 percent a month earlier.
"The latest data on eurozone inflation and unemployment do little to diminish the danger of a prolonged period of deflation in the currency union," said Jonathan Loynes, chief economist at Capital Economics.
Core inflation matched a record low, "emphasising the weakness of underlying price pressures in the region," Loynes said.
In January, the ECB set out its huge bond-buying programme, an audacious and controversial scheme to ward off deflation and stimulate growth in the eurozone, which expanded a weak 0.9 percent in 2014. But with a cash-strapped Greece in a bitter row with its European partners and on the cusp of tumbling out of the euro, analysts fear that a new debt crisis in the eurozone could affect the world.
On Monday, Fitch ratings agency said a renewed eurozone debt crisis was the biggest risk to the global economy, even greater than unstable oil prices, and despite the ECB's quantitative easing programme.
Economists fear deflation almost as much as rampant inflation because shoppers tend to put off purchases in the belief they may be cheaper in the future.
This leads to a spiral of ever weaker demand, slowing the economy and pushing up unemployment.
Joblessness remained hugely varied across the 19 nation eurozone, with a record low 4.8 percent in Germany and alarmingly high levels persisting in Spain, at 23.2 percent, and 26 percent in crisis-hit Greece, the highest rate in Europe.
Youth unemployment in Greece stood at a huge 51.2 percent and 50.7 percent in Spain.
The data for Italy, the eurozone's third biggest economy remained a worry, with unemployment at a high 12.7 percent in February and youth unemployment at 42.6 percent.
French unemployment remained flat at 10.6 percent. The biggest drops in unemployment were felt in small nations. In Estonia it fell to 6.2 percent from 8.4 percent a year earlier, and in Ireland it declined to 9.9 percent from 12.1 percent.
Across the 28-member EU, unemployment stood at 9.8 percent in February, down from 9.9 percent in January and 10.5 percent a year earlier.
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