The eurozone has officially slipped into deflation, after latest figures showed prices in December were 0.2pc lower than a year earlier.
The figure, far short of the European Central Bank's target of just under 2pc, is the latest pointer towards fresh intervention by the bank as it tries to prop up a sluggish economy.
Energy prices slumped 6.3pc compared to a year ago, driven by falling oil prices. The cost of industrial goods and food was flat while services rose 1.2pc. This is the first time the euro area has experienced deflation since 2009.
The ECB will meet on January 22 to consider whether to go beyond its existing stimulus measures and start buying sovereign bonds in a programme of quantitative easing.
ECB president Mario Draghi has dropped numerous hints that he hopes to push cash through the eurozone economy in this way, despite grumblings in Germany that such measures are outside the central bank’s mandate.
The euro, which reached a fresh nine-year low of $1.1842 before the figures were released, rose slightly after the announcement.
The currency has dropped from a high of $1.39 in May as the economic recovery in the United States diverged from the torpid eurozone.
The inflation figures follow German data on Monday showing that the currency bloc’s biggest member had experienced inflation of just 0.1pc in December, down from 0.5pc in the previous month and short of forecasts of 0.2pc.
A purchasing managers’ index for December was published on Tuesday showing continued weak growth in the eurozone economy, with a reading of 51.4. A score of 50 or above denotes growth, but survey compiler Markit said the reading pointed to expansion of just 0.1pc in the final three months of 2014.