Eurozone inflation lower than forecast
Eurozone inflation was lower than estimated in January, data showed, supporting market expectations that price growth will continue slowing as the economy contracts and possibly paving the way for an ECB rate cut.
The European Union’s statistics office Eurostat said consumer prices in the 17 countries using the euro fell 0.8 per cent in January against December for a year-on-year rise of 2.6 per cent -a downward revision from the first estimate of 2.7 per cent published on 1 February.
The European Central Bank (ECB) wants to keep inflation below, but close to two per cent over the medium term. Some economists believe the bank may consider cutting interest rates from the current one per cent to support the flagging economy.w
Eurostat data showed the monthly price fall was mainly due to seasonal reductions in the prices of clothes and package holidays.
In year-on-year terms, the inflation rate was underpinned mainly by high prices of fuel, which added 0.33 percentage points to the final figure, followed 0.14 percentage points from heating oil and another 0.14 points from gas.
Overall energy prices, boosted by tensions over oil-producer Iran’s nuclear programme, jumped 2.6 per cent in January against December for a 9.2 per cent year-on-year increase.
Without the volatile energy prices, inflation was already at the ECB target, having fallen 1.2 percent on the month for a 1.9 per cent year-on-year reading.
Core inflation, which excludes energy and unprocessed food prices, fell 1.4 per cent on the month and was 1.9 percent year-on-year, down from 2.0 percent in December.