But with eurozone inflation now well below the ECB's annual target of two percent and the region's economy struggling to shake off recession, analysts expect the ECB to keep rates on hold well into the new year.

The ECB's benchmark refinancing rate currently stands at a record low of one percent.

However, analysts say that a sustained period of deflation would threaten a contraction in economic activity and result in a rise in unemployment.

Nevertheless many forecasters believe that consumer prices might start to pick up again by the end of the year with economic growth in the eurozone beginning to gain traction as the global recession slowly fades.

One of the key factors leading to deflation in the eurozone has been the sharp fall in energy costs compared to a year ago when bullish global demand helped to drive oil prices up to an historic high of nearly $150 a barrel.

This in turn resulted in annual eurozone inflation surging to four percent in July 2008.

Deflation, which at first glance appears to be good news for consumers, is regarded by economists as just as dangerous as spiralling inflation.

This is because a protracted period of deflation encourages buyers to put off in making purchases, hoping for yet cheaper prices, but this can hurt companies' income, often resulting in cutbacks in production and worker layoffs.