Image caption The European Central Bank, headquartered in Frankfurt, will announce its interest rate decision on Thursday

Unemployment in the eurozone has surged to a fresh record high, while inflation has fallen to a three-year low, boosting expectations that the European Central Bank will cut interest rates.

Unemployment in the 17 countries using the euro hit 12.1% in March, up from February's 12%, according to official figures from Eurostat.

In total, 19.2m people are now out of work in the region.

Separate Eurostat data showed that inflation slowed to 1.2% in April.

Greece and Spain recorded the highest unemployment rates in the eurozone, at 27.2% and 26.7% respectively, while Austria, at 4.7%, and Germany, at 5.4%, had the lowest rates.

Youth employment, defined as those under 25, hit 3.6 million in the eurozone. In Greece, 59.1% of under-25s were unemployed as of the end of January, while in Spain, 55.9% were unemployed.

Inflation falls

Meanwhile, separate data from Eurostat showed consumer prices rose 1.2% in the year to April across the eurozone, a marked slowdown from March's 1.7% rise.

The slowdown, driven by a sharp fall in energy prices, means inflation in the eurozone is now at its lowest level since February 2010.

The figure was much lower than the fall to 1.6% that analysts had expected.

Interest rate cut

Economists said that the disappointing data had increased the likelihood of the European Central Bank announcing a cut in interest rates when it reveals its decision this Thursday.

``If an ECB rate cut on Thursday didn't look nailed-on before, it certainly does now,'' said Craig Erlam, market analyst at Alpari.

Marie Diron, senior economic adviser at Ernst & Young, added: ``It now seems pretty certain that it will lower interest rates."

A Reuters survey last week found that a majority of economists expect the European Central Bank (ECB) to cut the bank's main refinancing rate by 25 basis points to a record low of 0.5%.

If the ECB was to cut rates, it would mark its first reduction since July last year.