Inflation within the eurozone rebounded stronger than anticipated in January by Reuters
© Reuters. During the opening night in Berlin, people walk through the Mall of Berlin shopping center
BRUSSELS (Reuters) – Consumer inflation in the eurozone rebounded significantly more than expected in January, as a lightning estimate on Wednesday showed, boosted by price hikes in Germany and the Netherlands and, despite the ongoing downward trend, cheaper energy.
The European Union’s statistical office, Eurostat, estimated that consumer prices in the 19 countries that share the euro rose 0.2% in January from the previous month, an increase of 0.9% from the previous year after they were down 0.3% year on year in December.
Economists polled by Reuters had expected a year-on-year increase of 0.5% in January.
According to Eurostat estimates, volatile energy prices rose by 3.8% in January compared to the previous month, but were still 4.1% below the previous year’s value, while volatile prices for unprocessed food were also 1.1% compared to the previous month and 1.1% the previous year increased by 1.9%.
The measure excluding these two volatile components, which the European Central Bank refers to as core inflation and which it closely monitors in policy decisions, was still 0.3% down on the previous month, but up 1.4% on the previous year.
An even tighter measure, which also excludes alcohol and tobacco prices, which are often subject to change as governments raise excise taxes on them, fell 0.5% month-on-month but was also 1.4% higher than the same period of 2020 and thus far higher than expected
This is probably welcome news for the European Central Bank, which aims to keep inflation below but close to 2% percent, but despite extremely low interest rates and the purchase of government bonds worth hundreds of billions of euros, it has missed liquidity in the banking system for years bring in.
The faster growth in consumer prices in January was most noticeable in Germany’s largest economy, where prices were up 1.6% yoy, and in the Netherlands, where they were up 1.7% yoy .
Regardless, Eurostat said factory gate prices rose faster than expected, up 0.8% in December versus November, down -1.1% yoy. Economists polled by Reuters had expected a monthly increase of 0.7% and an annual decrease of -1.2%.
Producer prices provide an early indication of consumer inflation trends as factory gate price changes are most commonly passed on to the end user.
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