Eurozone Inflation January 2016


Eurozone: Inflation rises modestly in January

January 29, 2016

Inflation in the Eurozone ticked up in at the beginning of the year according to a preliminary estimate released by Eurostat on 29 January. Inflation—measured by the harmonized index of consumer prices—rose from 0.2% in December to 0.4% in January. The result represented the fastest increase since June 2014 and also overshot the 0.2% increase the markets had expected. According to Eurostat, January’s increase mainly reflected higher prices for food, alcohol and tobacco, as well as for services. Meanwhile, energy prices continued to be low. Inflation continues to hover in what ECB President Mario Draghi called the “danger zone” of below 1.0%. Month-on-month price variations and a more detailed set of data will be provided on 25 February.

Meanwhile, more complete data showed that harmonized consumer prices were unchanged in December relative to the previous month, which followed a 0.1% decrease observed in November. Complete data also showed that inflation in the Eurozone stood at 0.2% in December, bringing annual average inflation to zero for the 2015 as a whole. The flat reading in 2015 came in below the average inflation of 0.4% registered in 2014. Inflation in 2015 remained well below the European Central Bank target of close to but below 2%.

At a country level, 11 of the 19 Eurozone economies showed inflation rates equal to or above the regional average. Austria (1.1%), Belgium (1.4%) and Malta (1.2%) were the economies with the highest rates. In contrast, Cyprus (-0.6%), Slovakia (-0.5%) and Slovenia (-0.6%) were the economies that registered annual declines in HICP consumer prices.

Among the largest economies in the Eurozone, inflation moderated in Germany and Italy in December, while it rose in France and Italy. In Spain, the annual variation in consumer prices was negative in December for a fifth consecutive month.

FocusEconomics Consensus Forecast participants see inflation in the Euro area averaging 1.0% in 2016, which is down 0.1 percentage points from last month’s forecast. For 2017, panelists expect inflation to average 1.5%.

Author:, Senior Economist

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Eurozone Inflation Chart

Euro Inflation by country December 2015

Note: Year-on-year var. of harmonized consumer price index (HICP) in %.
Source: Eurostat

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