Euro zone inflation continued to fall in August, boosting expectations that the European Central Bank (ECB) will try bolster the region's economy by announcing further stimulus measures – perhaps as early as Thursday.
Consumer prices rose by just 0.3 percent year-on-year in August, according to official figures released by Eurostat Friday, meeting expectations but marking a fresh five-year low. This is down from 0.4 percent in July, and is significantly below the central bank's target of just below 2 percent.
Separate data revealed that the rate of unemployment in the euro zone remained stubbornly high in July, at 11.5 percent, unchanged from June.
The inflation data come at a key time for the ECB, just days ahead of its next policy meeting on Thursday.
ECB President Mario Draghi hinted at further stimulus measures in a speech in Jackson Hole last week, where he acknowledged that inflation expectations had been falling and said the ECB, "within its mandate, will use all of the available instruments needed to ensure price stability over the medium term."
Broader economic data for the euro zone has also continued to surprise on the downside.
The closely-watched composite Purchasing Managers' Index (PMI) – which measures business activity in the euro zone - slipped in August, coming in below forecasts. In addition, official figures revealed that economic growth in the region was stagnant in the second quarter, with gross domestic product (GDP) flat, below analysts' expectations.