Deflation fears mount as core eurozone inflation falls to record low

The spectre of deflation in Europe is once again back at the forefront of investors' minds today after the latest reading of price movements saw inflation fall to a record low.

A flash estimate from Eurostat, the European Commission's statistics bureau, showed overall inflation slowed to 0.8% in December from 0.9% the previous month. Core inflation, which excludes the most volatile prices such as food and energy, slowed to 0.7% - the lowest level since Eurostat started calculating inflation rates in 1996. The news may prompt action from the European Central Bank (ECB), which meets this week to decide on interest rates. Last month the ECB forecast inflation would return to a target of just below 2% in the medium term. It has forecast inflation will hit 1.1...