Eurozone Preliminary HICP inflation eases to 2.8% YoY in January, as expected

The Eurozone Harmonised Index of Consumer Prices (HICP) rose at an annual pace of 2.8% in January, a tad slower from December’s 2.9% increase, the official data published by Eurostat showed on Thursday. The data missed the market expectations of a 2.8% reading.

The Core HICP inflation declined to 3.3% YoY in January, as against December’s 3.4% print. The market consensus was for a 3.2% growth in the Core HICP.

On a monthly basis, the bloc’s HICP dropped 0.4% in January vs. a 0.2% increase seen in December. The core HICP inflation arrived at -0.9% MoM in the reported month, compared to a 0.5% increase seen previously.

The European Central Bank’s (ECB) inflation target is 2.0%. The old continent’s HICP inflation data significantly influences the market’s pricing of the ECB interest rate outlook.

Key details from the Eurozone inflation report (via Eurostat).

“Looking at the main components of euro area inflation, food, alcohol & tobacco is expected to have the highest annual rate in January (5.7%, compared with 6.1% in December), followed by services (4.0%, stable compared with December), non-energy industrial goods (2.0%, compared with 2.5% in December) and energy (-6.3%, compared with -6.7% in December).”

Separately, the Eurozone Unemployment Rate for December held steady at 6.4%, as expected.

EUR/USD reaction to the Eurozone inflation report

The Euro is little changed on mixed Eurozone inflation data. EUR/USD is trading 0.17% lower on the day at 1.0798, at the press time.