(BRUSSELS) - Inflation in the 15 euro countries plunged in November to a 14-month low in the face of slumping oil prices, an official EU estimate showed on Friday, paving the way for deep interest rate cuts.

Annual eurozone inflation dropped to 2.1 percent this month from 3.2 percent in October as consumer prices grew at the slowest pace since September 2007, the Eurostat data agency said.

Down sharply from a June and July record high of 4.0 percent, the rate also came in below economists forecasts for 2.4 percent, as polled by Dow Jones Newswires.

Economists said the drop set the stage for a steep cut in interest rates by the European Central Bank when it meets exceptionally in Brussels next Thursday for a monetary-policy setting meeting.

"Pressure is mounting on the ECB to deliver a deeper interest rate cut next Thursday than the 50 basis point reduction from 3.25 percent ... widely expected," said economist Howard Archer at consultants IHS Global Insight.

"Indeed, there is a compelling case for a 100 basis point cut to 2.25 percent," he said.

Eurozone inflation has been in retreat since peaking in July as oil and other commodities prices have plummeted in the face of a sharply slowing global economy.

Since reaching record highs above 147 dollars in July, oil prices have dropped to about 53 dollars a barrel.

With the eurozone economy facing a deep downturn, the ECB has already cut its main rate by a half percentage point twice in the last two months, bringing the benchmark cost of borrowing to 3.25 percent.

ECB president Jean-Claude Trichet, who has come under fire for raising interest rates in July in the face of the then record inflation, said this week: "We are ready to cut interest rates."

The Organisation for Economic Cooperation and Development forecast on Tuesday that the eurozone economy would shrink 0.6 percent in 2009 and warned recovery was unlikely before the second half of 2010.

Consumer and business confidence in the European Union slumped in November to the lowest level in 15 years, according to a widely watched European Commission survey on Thursday.

Adding to the gloom, Eurostat data also released on Friday showed that the eurozone unemployment rate ticked to the highest level in 21 months in October, hitting 7.7 percent of the workforce.

With the economy slowing sharply, Archer predicted that inflation too would remain firmly on its downward path.

"It looks odds-on that eurozone consumer price inflation will fall well below 1.0 percent during 2009 and a brief period of deflation certainly cannot be ruled out," he said.

As the economy and inflation slumped, he said the ECB might cut interest rates to as low as 1.5 percent in 2009 "and very possibly even lower."

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