Euro zone inflation drops to lowest since 2009

Euro zone inflation hit its lowest level since November 2009 in March, a shock drop that raises expectations the European Central Bank will take radical action to stop the threat of deflation in the currency bloc. Annual consumer inflation in the 18 countries sharing the euro was 0.5 percent in March, with the pace of price rises cooling from February's 0.7 percent reading, the EU's statistics office Eurostat said on Monday. The euro zone is far from the deflation that Japan suffered from the early 1990s, when falling prices weakened demand, leading to wage cuts and even lower prices, but the bloc's low inflation rate is a clear sign of economic fragility. Inflation has now been in the ECB's "danger zone" of below 1 percent for six consecutive months, and the flash reading increases the chances the ECB will cut interest rates when its Governing Council meets on Thursday.

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