-Chris Beauchamp, IG Index
Inflation in the Euro zone rose more than expected in January but remained below the European Central Bank's inflationary target. On Tuesday, Eurostat reported consumer prices advanced 1.8% on an annual basis in January, the highest level since February 2013, following December's 1.1% and surpassing analysts' expectations of 1.5%. In the meantime, the core Consumer Price Index, which excludes volatile items such as energy prices, came in at 0.9% year-over-year in January, unchanged from December and in line with market forecasts. Nevertheless, the ECB President Mario Draghi said policymakers would look beyond energy prices and seek further signs of rising underlying inflation in order to change the course of the Bank's monetary policy. Tuesday's data showed energy prices climbed 8.1% on a yearly basis in January after rising 2.6% in the preceding month, whereas the price of unprocessed food rose 3.3% year-over-year. Separately, Eurostat reported the Euro zone's economy advanced an annualized 2.0% on quarter in the three months to December 2016, while the US economy, the world's largest, grew at an annualized pace of 1.9% in the same period. Strong economic growth helped to lower the unemployment rate in the region, which dropped to 9.6% in December, the lowest level since May 2009.
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