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German inflation slips to 0.1% as energy costs plummet

German inflation slips to 0.1% as energy costs plummet

The eurozone looks to be slipping further towards deflation after the rate of inflation in Germany slipped to its lowest level since the financial crisis.

Data released today from the German Federal Statistical Office showed the rate of inflation in the biggest eurozone economy slumped to 0.1 per cent in December, down from 0.5 per cent in November.

It is the lowest recorded rate of inflation since Germany briefly slipped into deflation in 2009.

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The largest drag on prices came from energy, as the plummeting price of oil caused energy costs to fall 6.6 per cent in December.

The overall rate of inflation in the eurozone in December is set to be announced on Wednesday, with a fall into deflation possible following the German data.

The European Central Bank (ECB), which has a mandate to target a 2 per cent rate of inflation, has come under increasing pressure in recent months to introduce stimulus measures to prevent deflation.

Research from ING Investment Management has found the majority of institutional investors polled thought the ECB would embark on quantitative easing in 2015.