Consumer prices rose by only 8.5 percent, according to a first estimate from Eurostat. Experts had expected higher inflation. Germany’s data had to be estimated because the country didn’t deliver on time.
Inflation in the euro zone eased further at the beginning of the year. Consumer prices rose by 8.5 percent in January compared to the same month last year, according to the statistics office Eurostat on Wednesday. Experts had expected a rate of 8.9 to 9 percent. In a month-on-month comparison, prices fell by 0.4 percent in January.
The European Central Bank (ECB) is likely to take the slowdown in inflation before its interest rate decision on Thursday with some relief, although there is no reason to give the all-clear yet. The inflation rate is still miles away from the ECB’s target of two percent.
With the fall in January, inflation has weakened for the third month in a row. Inflation was 9.2 percent in December and a record 10.6 percent in October. Core inflation, which excludes volatile energy and food prices, stayed at 5.2 percent in January. It is thus at its highest level since the introduction of the euro and shows that the upward trend in prices is not just affecting energy and raw materials. Energy, on the other hand, was 17.2 percent more expensive, after 25.5 percent in December.
Eurostat has made an estimate for the consumer price data for Germany, as the Federal Statistical Office postponed the publication of the January data due to a technical problem. The development of inflation in the euro zone is a key decision-making criterion for the ECB. Experts are assuming that the currency watchdogs around central bank chief Christine Lagarde will raise the key rates by half a percentage point on Thursday, as they did in December. The interest on deposits, which is decisive on the financial markets and which banks receive from the central bank for parking excess funds, is currently still two percent.