Brussels — Eurozone consumer inflation jumps by much more than expected in January, an EU statistics office estimate showed on Wednesday, pushed up by a jump in prices in Germany, Europe’s biggest economy, and the Netherlands, and despite the continued downward pull from cheaper energy.
Eurostat estimated that consumer prices in the 19 countries sharing the euro rose 0.2% month-on-month in January for a 0.9% year-on-year jump, rebounding from a 0.3% year-on-year fall in December.
Economists had expected a 0.5% year-on-year rise in January. Analysts cautioned that the extraordinary circumstances of the Covid-19 pandemic make inflation difficult to measure.
Volatile energy prices rose 3.8% month-on-month in January, Eurostat estimated, but were still 4.1% lower than a year earlier, while also volatile unprocessed food prices went up 1.1% on the month and 1.9% year-on-year.
The measure excluding these two volatile components, which the European Central Bank (ECB) calls core inflation and follows closely in policy decisions, still eased 0.3% on the month, but rose 1.4% on the year.
An even narrower measure excluding also alcohol and tobacco prices that are often subject to changes because governments raise excise tax on them, fell 0.5% on the month but was also 1.4% higher than in the same period of 2020, far higher than expected
This is likely to be welcome news for the ECB, which wants to keep inflation below, but close to 2% but has been missing that target for years despite ultra-low interest rates and buying hundreds of billions of euros in government bonds to inject liquidity into the banking system.
The faster consumer price growth in January was mainly visible in the biggest economy Germany, where prices went up by 1.6% on the year, and in the Netherlands, where they rose 1.7% year-on-year.
Separately, Eurostat said prices at factory gates rose more than expected, at 0.8% in December against November for a -1.1% year-on-year fall. Economists polled by Reuters had expected a 0.7% monthly increase and a -1.2% annual decline.
Producer prices give an early indication of consumer inflation trends because changes to prices at factory gates are most often passed on to the final consumer.