(Removes extraneous words from headline)
* Inflation falls to 0.3 pct y/y in Aug as expected
* ECB under pressure, but no move expected on Sept. 4
* Euro zone inflation stuck in 'danger zone' since Oct/2013
* Unemployment stable at 11.5 pct in July
* For GRAPHICS: link.reuters.com/kuj24s
* For inflation TABLE:
By Martin Santa
BRUSSELS, Aug 29 Euro zone inflation dropped as
expected to a fresh five year low in August, data showed on
Friday, but it was not likely to force the European Central Bank
into immediate policy intervention next week,
Consumer prices in the 18 countries using the euro rose by
just 0.3 percent year-on-year in August, the smallest increase
since October 2009, the European Union's statistics office
Eurostat data showed.
Inflation, which dropped unexpectedly to 0.4 percent in
July, has been locked in what ECB President Mario Draghi called
a 'danger zone' of below 1 percent since October last year.
Vanishing inflation strengthens poses problems for the ECB
as it tries to respond to the bloc's stalled recovery, which is
facing additional struggles because of economic sanctions
imposed against Russia in July over its involvement in the
deepening conflict in Ukraine.
Any immediate action coming at the ECB's Sept. 4 policy
meeting is not considered likely, according to ECB sources
talking to Reuters earlier this week. The bank is likely to
The drop in August inflation was led by a 2.0 percent
decline in the highly volatile prices of energy and a prices of
food, alcohol and tobacco falling by 0.3 percent for a second
month in a row in August.
In June, the ECB cut interest rates to record lows, started
charging banks to keep their funds overnight and launched a new
long-term loan programme, which will start in September and aims
to give banks an incentive to lend more to the real economy.
Since then, the ECB has been in a wait-and-see mode, wanting
to see the impact of its new liquidity injection first before
considering further stimulus measures, though Draghi has
stressed repeatedly the ECB stands ready to do more if needed.
The ECB targets an inflation rate at below-but-close to 2
percent, a level not seen since the first quarter of 2013.
In a separate data release Eurostat said that unemployment
in the euro zone was, as expected unchanged at 11.5 percent for
a second months in a row in July, leaving 18.4 million people
without jobs in the 9.6 trillion euro economy.
A cocktail of jobless recovery, sluggish growth and low
inflation is a major worry for the European Union and Brussels,
the ECB urge governments to speed up implementation of
structural reforms, vital for Europe's economy to heal.
(Reporting by Martin Santa Editing by Jeremy Gaunt)