Inflation across the countries that share the euro fell further below the European Central Bank's target in January, a development that may stoke speculation of another interest rate reduction.

Eurostat, the EU's statistics office, says Friday that inflation in the 18-country eurozone fell to 0.7 percent in the year to January, down from 0.8 percent the previous month. The consensus in the markets was for a rise to 0.9 percent.

The fall is likely to trigger speculation that the eurozone is about to suffer a debilitating bout of deflation — falling prices can hurt an economy as consumers delay purchases in the hope of getting bargains down the line and businesses postpone investment.

Separately Eurostat says eurozone unemployment fell by 129,000 in December. That's the biggest fall since April, 2007.