Eurostat: Eurozone Inflation Turns Down again in January

Eurozone inflation fell to 0.7 percent in January from 0.8 percent in December, official data showed on Thursday amid concerns that falling prices could undermine growth.

A flash estimate from the Eurostat statistics office showed year-on-year inflation in the 18-nation eurozone dropping from 2.0 percent in January 2013 after falling steadily in recent months.

In January, the rise of food, alcohol and tobacco products fell to 1.7 percent against 1.8 percent the previous month.

That was followed by services for which prices rose by 1.1 percent against 1.0 in December, industrial goods to 0.2 percent against 0.3 percent while energy prices plunged to fall 1.2 percent against 0.0 percent.

The figures come amid fears that disinflation could harm a growing but lacklustre recovery in the eurozone.

lnternational Monetary Fund head Christine Lagarde warned earlier this month that while growth in the global economy was picking up, there were "rising risks" of deflation.

Tough EU government austerity policies to combat the debt crisis have sucked demand out of the economy, pushing inflation way below the European Central Bank's target of close to 2.0 percent.

Deflation -- falling prices in real terms -- can encourage consumers to put off buying goods in the expectation that if they wait, they will become cheaper.

That in turn weakens the economy as companies reduce output accordingly, hitting employment and demand, thereby setting off a downward spiral.