FRANKFURT (Nov 29): Euro-area inflation slowed in November to match a five-year low, prodding the European Central Bank toward expanding its unprecedented stimulus program.

Consumer prices rose 0.3 percent from a year earlier, the European Union’s statistics office in Luxembourg said.

That was in line with the median forecast of 41 economists in a Bloomberg News survey.

Unemployment held at 11.5 percent in October, Eurostat said in a separate report.

Continued low inflation is keeping pressure on the ECB to add to its existing package of measures aimed at reviving the economy.

While the slowdown is partly related to a drop in oil prices, President Mario Draghi, who may unveil more pessimistic forecasts after a meeting of policy makers on Dec 4, says he wants to raise inflation “as fast as possible”.

“The scale of the disinflation problem facing the ECB becomes increasingly concerning as time progresses,” said Colin Bermingham, an economist at BNP Paribas in London.

“Downward revisions to their inflation and growth forecasts will be key to justifying an expansion of their asset purchase programs.”

The Eurostat report showed that energy prices fell 2.5 percent in November from a year earlier.

Crude oil has plunged more than 30 percent in the past three months.

Food, alcohol and tobacco prices increased 0.5 percent.

Small comfort
Core inflation, which strips out volatile items such as energy, food, tobacco and alcohol, stayed at 0.7 percent in November, according to Eurostat.

“The only crumb of comfort for the ECB –- and it is not much -– is that November’s renewed drop in inflation was entirely due to an increased year-on-year drop in energy prices,” said Howard Archer, chief European economist at IHS Global Insight in London.

The data are “worrying news” for the central bank, he said.

Spanish consumer prices dropped 0.5 percent this month from a year ago, matching the fastest rate of deflation since 2009.

In Germany, Europe’s largest economy, inflation slowed to the weakest since February 2010.

Euro-area inflation has been at less than half the ECB’s goal of just below two percent for more than a year.

The institution forecast in September that inflation will average 1.1 percent in 2015 and 1.4 percent in 2016.

“We have to be very watchful that low inflation does not start percolating through the economy,” Draghi said in Frankfurt on Nov 21.

Right moment
Some policy makers have indicated that next week’s meeting may not be the right time to pile on more stimulus.

ECB Vice President Vitor Constancio said this week that the best moment to consider new tools is next quarter, when the impact of current measures can be gauged.

The Frankfurt-based ECB is already buying covered bonds and asset-backed securities as it expects to bring its balance sheet back to the level it had at the beginning of 2012.

This comes after it cut interest rates to record lows and offered long-term loans to banks to fuel credit.

While Draghi has said policy makers are united in their commitment to do more if needed, he has also indicated there may not be a need to rush.

Time is needed for the “positive effects” of the current stimulus to be felt, he said.

“However, should it become necessary to further address risks of too prolonged a period of low inflation, the Governing Council is unanimous in its commitment to using additional unconventional instruments within its mandate.”

Still, Bundesbank President Jens Weidmann, a long-running opponent to buying government bonds, highlighted the positive consequence of low oil prices.

“There’s a stimulant effect coming from the energy prices -- it’s like a mini stimulus package,” he said in Berlin.