Eurozone inflation accelerated for the second straight month in January despite the decline in energy prices, flash data from Eurostat showed Friday.
Harmonized consumer prices rose 0.4 percent year-on-year, faster than the 0.2 percent increase seen in December. A similar rate was last seen in October 2014.
This was the fourth consecutive increase and matched economists’ expectations.
Nonetheless, headline inflation has been below the European Central Bank’s target of ‘below, but close to 2 percent’ since early 2013.
Food, alcohol and tobacco prices advanced 1.1 percent and services cost by 1.2 percent. Meanwhile, energy prices declined 5.3 percent.
Core inflation, excluding energy, food, alcohol and tobacco, increased slightly to 1 percent from 0.9 percent in December. Economists had forecast prices to rise again by 0.9 percent. Final data is due on February 25.
January’s rise in Eurozone inflation looks likely to be at least partly reversed in February on the anniversary of a sharp rise in oil prices last year, Jonathan Loynes at Capital Economics said.
And depending on the path of oil prices, headline inflation could then stay very close to zero in the first half of this year and might even fall back into negative territory, the economist noted.
Loynes continues to expect both a 10 basis point cut in the ECB deposit rate and an acceleration of asset purchases at the next policy meeting on March 10.
Reaching an 8-month high, Germany’s inflation doubled to 0.4 percent in January from 0.2 percent in December.
French harmonized inflation edged up to 0.4 percent from 0.3 percent. However, Spain’s harmonized consumer prices slid 0.4 percent after easing 0.1 percent a month ago.
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