- ORIGINAL NEWS
Euro zone inflation eases as expected, but core figures disappoint
- SUMMARY
Headline inflation in the Eurozone showed a modest decline to 2.8% in January, consistent with expectations, despite rising to 2.9% in December and 2.4% in November.
Similarly, core inflation reached 3.3% in January, slightly above the predicted 3.2%.
Energy price support measures ceasing is a major contributor to the changes observed in inflation levels.
Growth within the Eurozone has been stagnant.
German economic growth, a major factor in the Eurozone, is particularly concerning as it saw a 0.3% decrease in the fourth quarter.
The European Central Bank (ECB), with Lagarde at the helm, stated that the inflation rate is expected to decrease when interest rates decline, but any cuts in these rates are still being decided.
Kamil Kovar’s analysis indicates that energy presented a decline, but core inflation only saw a small dip.
This raises the likelihood that interest rate cuts occurring in March are unlikely and implies cuts in June are more likely.
- NEWS SENTIMENT CHECK
- Overall sentiment:
neutral
Positive
“Headline price rises came in at 2.8%, in line with a forecast of economists polled by Reuters.”
“Preliminary figures out earlier this week showed inflation in Germany easing slightly more than had been forecast, reaching 3.1%.”
Negative
“Annual headline price rises came in at 2.8%, in line with a forecast of economists polled by Reuters. Inflation stood at 2.9% in December, up from 2.4% in November, largely due to the wind-down of energy price support measures.”
“Services inflation came in quite hot.”