Prices in the 19 euro countries fall 0.6 percent annually in January as ECB readies stimulus

German Vice Chancellor and Minister for Economy and Energy Sigmar Gabriel attends a news conference to present the annual German economic report with the government's economy projection in Berlin, Wednesday, Jan. 28, 2015. (AP Photo/Markus Schreiber) (The Associated Press)

FRANKFURT, Germany – Falling oil prices and a weak economy caused consumer prices in the eurozone to drop even more sharply in January ahead of the start of a 1 trillion euro ($1.1 trillion) stimulus effort by the European Central Bank.

Prices declined 0.6 percent in the 12 months to January, more than the 0.2 percent annual drop in December and worse even than the 0.5 percent fall expected on average by market analysts.

Friday's report by the Eurostat statistics agency showed that the core inflation rate, which strips out volatile food and energy prices, was plus 0.5 percent, down from 0.7 percent the month before.

Low oil plays a big role in falling consumer prices. But weak prices are also a sign of the deep economic malaise afflicting the 19 countries that share the euro currency.

The European Central Bank is readying a massive 1 trillion euro stimulus program to try to raise inflation close to its goal of 2 percent and to get the economy moving. The ECB plans to buy 60 billion euros per month in government and private-sector bonds using newly printed money. That is aimed at driving down borrowing rates. It should also lift inflation simply by increasing the number of euros circulating in the economy.

Meanwhile, jobless figures showed a slight improvement in December, with the unemployment rate falling to 11.4 percent from 11.5 percent the month before. The number of unemployed people fell by 157,000 in the eurozone.

The figures showed a wide diversity between countries. Germany, the eurozone's biggest economy, had a rate of only 4.8 percent. Greece, still recovering from a crisis over too much government debt, had the highest at 25.8 percent. Spain, working off a debt crisis that involved a real estate boom and bust, had a jobless rate of 23.7 percent.

Greece's new government has rejected the budget austerity course forced on the country as a condition of getting international bailout loans, but creditor countries led by Germany are insisting that it stick with its promises to restrain government spending and public jobs.