- Dennis de Jong, managing director of UFX.com
Inflation across the currency bloc was lower than initially estimated in January, adding to signs that the European Central Bank is likely to deploy more stimulus as soon as next month. Eurostat reported that the annual rate of inflation in January was 0.3%, compared with the previous estimate of 0.4%. Although consumer prices are gradually climbing, the annual rate is still way off the central bank's target of just under 2%. The consensus in markets is that the inflation rate will slide to 0.1% in February due to renewed weakness in oil prices. After stripping out the volatile components of energy, food, alcohol and tobacco, the Euro zone's core inflation remains below the target at 1%.
Meanwhile, the Spanish economy continued to expand in the final quarter of 2015. The Euro zone's fourth biggest economy grew 3.5% on an annual basis, accelerating from 3.4%, a significant improvement compared with the 1.4% growth in 2014. That was the quickest growth since 2007, when Spain's economy added 3.6%. The main upside driver was domestic consumption. At the same time, in Italy shoppers purchased less in December, with retail sales falling 0.1% in December, following November's gain of 0.2%. Measured on an annual basis, retail sales increased 0.6%.
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