Euro zone core inflation edges higher in Jan

Euro zone core inflation edges higher in Jan

© Reuters. People walk through Mall of Berlin shopping centre during its opening night in Berlin

By Jan Strupczewski

BRUSSELS (Reuters) – Euro zone headline consumer inflation slowed slightly in January because of a sharp deceleration of energy price growth, but core inflation watched closely by the European Central Bank in policy decisions edged slightly higher, data showed on Friday.

The European Union’s statistics office Eurostat said consumer prices in the 19 countries sharing the euro fell 1.0 percent month-on-month in January for a 1.4 percent year-on-year rise, in line with previous estimates and market expectations.

Energy prices, which fell 0.9 percent on the month and were 2.7 percent higher than in January 2018, slowed sharply from a 5.5 percent year-on-year growth in December and 9.1 percent increase in November.

Without the volatile components of energy and unprocessed food, or what the ECB calls core inflation, prices fell 1.2 percent month-on-month for a 1.2 percent year-on-year increase, accelerating from 1.1 percent in annual terms in December.

Eurostat said the biggest upward push for consumer prices came from services, which contributed 0.7 percentage point to the overall year-on-year result, followed by food, alcohol and tobacco with 0.36 points and energy with 0.26 percentage points.

European Central Bank policymakers took a gloomy view of the euro zone economy at their last policy meeting and asked for swift preparations for giving banks more long-term loans, minutes of the meeting showed.

With growth unexpectedly weak for the third straight quarter, policymakers are increasingly concerned that global uncertainty is derailing the euro zone’s recovery, undoing years of work by the ECB to kickstart the bloc.

Although the ECB just ended a 2.6 trillion euro bond purchase scheme to stimulate growth, it is now preparing the ground for giving more multi-year, cheap loans to banks to ensure they keep credit flowing to the economy even during the slowdown.

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Source : Reuters Link

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