Eurozone inflation falls to 2% in January

The euro symbol in front of the European Central Bank in Frankfurt The rate of inflation across the 17-strong zone is now just above target

Inflation across the eurozone has fallen from 2.2% to 2% in January, according to official figures.

The fall comes as widespread austerity and weakening economies leave consumers with little free cash to spend, depressing retailers' ability to increase prices.

Some analysts think the drop could leave the European Central Bank (ECB) room to cut interest rates at its next meeting.

Rates are currently at 0.75%.

The European Commission has estimated inflation in the eurozone will fall to 1.8% this year.

Its target for inflation is "close to, but below 2%".

The inflation rate for the European Union's 27 member states, including those nations that do not use the euro, was 2.1%, down from 2.3% in December.

Last January, the rate was 2.9%.

The country with the highest inflation rate was Romania at 5.1%.

Other economic data out on Thursday included employment data from Germany, which showed the number of people out of work fell in February to its lowest level for five months after being adjusted for seasonal factors.

The seasonally-adjusted jobless total fell by 3,000 to 2.9 million, giving a jobless rate of 6.9%.

The unadjusted total rose by 18,013 to 3.156 million, with the jobless rate at 7.4%.

The news came despite a background of a contracting German economy, which shrank by 0.6% in the last quarter of 2012.

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