Eurozone inflation slumped to 1.1% in September, according to figures released by Eurostat, the statistical office of the European Union. This figure is significantly below the European Central Bank’s (ECB) target of close to, but below, 2%, fueling concerns about potential deflationary pressures within the Eurozone economy.

The decline in inflation is likely to intensify the debate within the ECB regarding the need for further monetary easing measures. Some policymakers have already expressed concerns about the risk of prolonged low inflation, which could hinder economic recovery and make it more difficult for indebted countries to manage their debt burdens.

The euro has come under pressure following the release of the inflation data. The single currency weakened against the US dollar and other major currencies as investors reacted to the disappointing figures. The prospect of further ECB action to combat low inflation is likely to weigh on the euro in the near term.

Analysts are now closely watching the ECB’s response to the latest inflation data. The central bank is scheduled to hold its next policy meeting soon, and the possibility of interest rate cuts or other unconventional measures is being widely discussed.

Key factors contributing to the low inflation rate include:

• Weak demand in several Eurozone countries
• Falling energy prices
• Wage moderation

The ECB faces a challenging task in balancing the need to support economic growth with the risks of fueling asset bubbles or undermining price stability.