Reuters
Eurozone consumer inflation rebounded by much more than expected in January, a flash estimate showed on Wednesday.
This is pushed up by a jump in prices in Germany and the Netherlands, and despite the continued downward pull from cheaper energy.
The European Union’s statistics office (Eurostat) estimated that consumer prices in the 19 countries sharing the euro rose 0.2 per cent month-on-month in January for a 0.9 per cent year-on-year jump, rebounding from a 0.3 per cent year-on-year fall in December.
Economists polled by Reuters had expected a 0.5 per cent year-on-year rise in January.
Volatile energy prices rose 3.8 per cent month-on-month in January, Eurostat estimated but were still 4.1 per cent lower than a year earlier.
Also, volatile unprocessed food prices went up 1.1 per cent on the month and 1.9 per cent 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 per cent on the month but rose 1.4 per cent on the year.
An even narrower measure excluding also alcohol and tobacco prices that are often subject to changes because governments raise the excise tax on them, fell 0.5 per cent on the month but was also 1.4 per cent 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 two per cent.
But the bank 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.
The faster consumer price growth in January was mainly visible in the biggest economy Germany, where prices went up 1.6 per cent on the year and in the Netherlands, where they rose 1.7 per cent year-on-year.
Separately, Eurostat said prices at factory gates rose more than expected, at 0.8 per cent in December against November for a -1.1 per cent year-on-year fall.
Economists polled by Reuters had expected a 0.7 per cent monthly increase and a -1.2 per cent annual decline.
Producer prices give an early indication of consumer inflation trends because changes to prices at factory gates are most often passed on to the final consumer. (Reuters/NAN)
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