Euro zone in­fla­tion re­vised down to 0.3pc in Jan­uary

The Pak Banker - - MARKETS/SPORTS -

Euro zone con­sumer prices grew 0.3 per­cent year-on-year in Jan­uary, the Euro­pean Union's sta­tis­tics of­fice said on Thurs­day, re­vis­ing down­ward its ear­lier es­ti­mate of a 0.4 per­cent rise.

The an­nual in­fla­tion fig­ure for Jan­uary was below ex­pec­ta­tions. Econ­o­mists polled by Reuters had fore­cast an in­crease of 0.4 per­cent. In­fla­tion is how­ever slightly ac­cel­er­at­ing com­pared to De­cem­ber, when prices in the 19 coun­tries shar­ing the euro rose 0.2 per­cent. On a monthly ba­sis, prices in the euro zone dropped in Jan­uary by 1.4 per­cent, as ex­pected.

Ex­clud­ing the volatile prices of un­pro­cessed food and fuel, or what the Euro­pean Cen­tral Bank calls core in­fla­tion, prices in­creased in Jan­uary by 1.0 per­cent, in line with fore­casts and more than the 0.9 per­cent rise recorded in De­cem­ber.

The new fig­ures add to the ECB's pol­icy headaches. The Euro­pean Cen­tral Bank wants to keep head­line in­fla­tion below, but close to, 2 per­cent and has been buy­ing bil­lions of euros of euro zone govern­ment bonds to in­ject more cash into the econ­omy and ac­cel­er­ate price growth.

En­ergy prices were con­firmed as the main drag on euro zone in­fla­tion. They dropped 5.4 per­cent in Jan­uary on a yearly ba­sis, more than the 5.3 per­cent de­crease pre­vi­ously es­ti­mated by Euro­stat.

The drop in en­ergy prices, driven by plum­met­ing oil prices, is how­ever slow­ing down from the 5.8 per­cent de­crease recorded in De­cem­ber, a down­ward trend started in Oc­to­ber.

Un­pro­cessed food was the main fac­tor driv­ing prices up in the euro zone, mark­ing an an­nual 1.4 per­cent in­crease, which was how­ever lower than the 1.8 per­cent rise ear­lier es­ti­mated by Euro­stat. In De­cem­ber, un­pro­cessed food prices in­creased by 2.0 per­cent.

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