DATA SNAP: Euro-Zone Consumer Prices Fell More Than Expected

LONDON -- Consumer prices across the 16 countries that use the euro fell more steeply than in August, in line with bigger-than-expected declines in Germany, Spain and Belgium, and indicating that inflation is currently not a risk to an economy emerging from recession.

The European Union's official statistics agency Eurostat Wednesday said the flash estimate of the annual consumer price index in the euro zone fell 0.3% on the year in September. In August the consumer price index declined 0.2%.

The steeper drop wasn't expected by economists surveyed by Dow Jones Newswires last week who had predicted a 0.2% decline.

However, the drop was in line with estimates from Germany on Monday and Spain and Belgium Tuesday which showed that CPI in each country fell by more than was expected. Germany's statistics agency said the decline was due to lower food and energy prices, but economists said Monday that this trend is not expected to last and we should see the CPI moving back into positive territory in the coming months.

The annual rate of euro-zone inflation remains well below the level of around 2% that the European Central Bank targets over the medium term.

However, the ECB has previously stated that it expects the CPI to remain negative for several months before returning to positive territory by the end of the year.

Other data reported earlier Wednesday suggest that the consumer price index could turn positive sooner rather than later. The forward-looking producer price indexes for August from both France and Italy posted monthly prices rises and smaller annual declines.

In France, the PPI rose 0.4% on the month and fell by 8.5% on the year, and French statistics office Insee noted there was an increase in the price of oil and chemicals in August.

In Italy, producer prices rose 0.6% on the month and fell 6.7%% on the year, compared with forecasts of a 0.5% monthly gain and a 7.3% annual fall.