- Christophe Barraud, chief economist at Market Securities LLP
The Euro zone's inflation accelerated in January, providing a modest relief for the European Central Bank, which is expected to slash rates again as price growth could slid to the negative territory by the spring. Consumer price growth in the currency bloc has hovered near zero for more than a year, stubbornly staying below the central bank's 2% goal. Headline inflation climbed 0.4%, up from 0.2% in December, marking the biggest increase since October 2014. Meanwhile, core inflation, which strips out volatile food and energy prices, increased to 1.0% from 0.9%. An ongoing decline in commodity prices and slowing growth in China and emerging markets have dampened price pressures and making the target more difficult to reach.
Annual inflation rate in the Euro zone's number one economy, Germany, ticked up 0.4% in January, from 0.2% in the preceding month. Furthermore, German retail sales dropped 0.2% on month in December, compared with the 0.4% increase recorded in the prior month. Measured on an annual basis, retail turnover rose 1.5% in the reported month, following a 2.4% increase in November. Meanwhile, the Spanish economy grew 0.8% in the fourth quarter amid a slowdown in global demand, while the nation's GDP added 3.5% from a year earlier.
© Dukascopy Bank SA