Eurozone inflation has tumbled to its lowest level in more than two years on the back of crumbling economic activity, extending the steep sell-off in the euro that has emerged since the start of the year.

Annual inflation in the 16-country region fell to 1.6 per cent in December from 2.1 per cent a month earlier, according to an initial estimate by Eurostat, the European Union’s statistical office. That was the same as in October 2006 but otherwise the lowest since November 1999.