Euro zone inflation revised down to 0.3% in January

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

The annual inflation figure for January was below expectations. Economists polled by Reuters had forecast an increase of 0.4 per cent.

Inflation is however slightly accelerating compared to December, when prices in the 19 countries sharing the euro rose 0.2 per cent.

On a monthly basis, prices in the euro zone dropped in January by 1.4 per cent, 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 per cent, 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 per cent 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 per cent in January on a yearly basis, more than the 5.3 per cent decrease previously estimated by Eurostat.

The drop in energy prices, driven by plummeting oil prices, is however slowing down from the 5.8 per cent 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 per cent increase, which was however lower than the 1.8 per cent rise earlier estimated by Eurostat. In December, unprocessed food prices increased by 2 per cent.

Reuters