Euro zone inflation rebounds more than expected in January

Euro zone inflation rebounds more than expected in January
  • Clock-gray 15:12
  • calendar-gray 03 February 2021

Euro zone consumer inflation rebounded by much more than expected in January, a flash estimate showed on Wednesday, pushed up by a jump in prices in Germany and the Netherlands, and despite the continued downward pull from cheaper energy, APA reports citing Reuters.

The European Union’s statistics office Eurostat estimated that consumer prices in the 19 countries sharing the euro rose 0.2% month-on-month in January for a 0.9% year-on-year jump, rebounding from a 0.3% year-on-year fall in December.

Economists polled by Reuters had expected a 0.5% year-on-year rise in January.

Volatile energy prices rose 3.8% month-on-month in January, Eurostat estimated, but were still 4.1% lower than a year earlier, while also volatile unprocessed food prices went up 1.1% on the month and 1.9% year-on-year.

The measure excluding these two volatile components, which the European Central Bank calls core inflation and follows closely in policy decisions, still eased 0.3% on the month, but rose 1.4% on the year.

An even narrower measure excluding also alcohol and tobacco prices that are often subject to changes because governments raise excise tax on them, fell 0.5% on the month but was also 1.4% higher than in the same period of 2020, far higher than expected

This is likely to be welcome news for the European Central Bank, which wants to keep inflation below, but close to 2% percent but has been missing that target for years despite ultra low interest rates and buying hundreds of billions of euros in government bonds to inject liquidity into the banking system.

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