October 31, 2012 / 10:08 AM / 5 years ago

Euro zone inflation eases, unemployment at new highs

People enter a government-run employment office in Madrid October 26, 2012. REUTERS/Andrea Comas

BRUSSELS (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 percent year-on-year, down from 2.6 percent in September, though still above the European Central Bank target of below, but close to 2 percent.

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

The second biggest inflation contributor was food, which was up 3.2 percent year-on-year, up from 2.9 percent 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 percent, 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 percent of the workforce 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 percent of the workforce in September from 25.5 percent the month before. Among young Spaniards, under 25 years, unemployment rose to a staggering 54.2 percent from 53.8 percent.

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

Reporting by Jan Strupczewski; editing by Rex Merrifield

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