Eurozone's consumer price inflation slowed more-than-expected in December to its lowest level in eight months, and the private sector expanded the weakest pace in over four years, damping expectations for an interest rate hike from the European Central Bank in the near term.
The consumer price index rose 1.6 percent year-on-year following a 1.9 percent increase in November, preliminary figures from Eurostat showed on Friday. Economists had forecast 1.8 percent inflation.
The latest inflation rate was the lowest since April, when the rate was 1.3 percent.
Core inflation, which excludes prices of energy, food, alcohol & tobacco, was 1 percent in December, unchanged from November. That was in line with economists' expectations.
In December, energy prices registered the biggest annual increase of 5.5 percent versus 9.1 percent in November.
Prices of food, alcohol & tobacco grew 1.8 percent, which was slower than the 1.9 percent gain in the previous month.
Elsewhere, survey data from IHS Markit showed that Eurozone Composite Purchasing Managers' Index, or PMI, fell to 51.1 from 52.7 in November. The final reading was weaker than the flash estimate of 51.3.
A PMI score above 50 shows expansion in the sector.
The slowdown in growth during December in part reflected lower activity in France, where the 'gilets jaunes' movement reportedly led to a first fall in economic output for two-and-a-half years, IHS Markit said.
The Eurozone Services PMI fell for third straight month to 51.2, its lowest level in over four years.
"Data released this morning add to the evidence that economic growth in the currency union has shifted down a gear and, with underlying inflation still low, it now looks likely that the ECB will wait much longer before raising interest rates than its current guidance implies," Capital Economics economist Jack Allen said.
Among the big four, Germany's Composite PMI fell to a 66-month low of 51.6, weaker than the flash estimate.
France's measure was in contraction territory, at a 49-month low of 48.7 and weaker than the initial reading of 49.3.
Spain's composite PMI hit a 3-month low of 53.4, while Italy's measure was at a three-month high of 50.
Eurostat is set to release the final figures for December inflation on January 17.
Separate data from Eurostat showed that euro area producer price inflation slowed to 4 percent in November from 4.9 percent in October. Economists had predicted 4.2 percent price growth.
Energy sector registered the biggest annual gain of 10.8 percent, followed by intermediate goods with a 2.6 percent increase.
Producer prices decreased 0.3 percent month-on-month after a 0.8 percent increase in October. Economists were looking for a 0.2 percent fall.
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