Euro Zone Inflation Rises to 2.5% in January

In January, euro zone inflation accelerated to 2.5% on an annual basis, surpassing economists’ expectations of 2.4%. Core inflation remained unchanged at 2.7% since September, while services inflation slightly decreased to 3.9% from 4% in December. Energy costs rose significantly by 1.8% year-on-year, a sharp increase from December’s 0.1% rise. Following a low of 1.7% in September, headline inflation has re-accelerated as the impact of previous lower energy prices has faded. The European Central Bank (ECB) indicated that disinflation is “well on track,” with expectations for inflation to return to a 2% medium-term target within the year. The ECB recently cut interest rates by 25 basis points to 2.75%, with further reductions expected. Additionally, preliminary consumer price index data reported inflation rates of 1.8% in France and 2.8% in Germany.

Source: CNBC