Eurozone Core Inflation Remains Unchanged

Ibeth Rivero
Ibeth Rivero
on January 07, 2020 | Updated On Jan 07, 2020
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EurozoneAccording to data published by Eurostat, the Eurozone inflation levels accelerated in December, followed by higher retail sales than expected, signaling an increasing household demand.

Consumer prices for the bloc went up by 1.3 percent (year-to-year), which is a 0.3 percent gain for the month.

Energy prices rose by 0.2 percent (year-to-year) after falling 3.2 percent in November. Unprocessed food prices increased as well, going up 2.1 percent (year-to-year) from November's 1.8 percent. When those two components are excluded from the measurement (what is called "core inflation"), the inflation levels remained unchanged during the month.

This is not good news for the European Central Bank, as it intends to keep the inflation levels near to its 2 percent target, excluding food and energy prices. This constant failure on reaching the desired inflation is what drives the bank to insist on implementing stimulus measures.

“Core inflation remained unchanged as both core goods and core services remained roughly unchanged. German package holiday prices did put upward pressure on core services prices in December, and from that perspective, today’s numbers are perhaps slightly disappointing,” said analysts at Nordea Markets, adding that they expect the ECB to be unaffected by those figures since "core inflation is likely to be lower already next month and activity indicators are probably more important until the risks of a deeper downturn have diminished.”

Retail sales were greater than expected, rising 1 percent (month-to-month) which makes a 2.2 percent yearly increase and after two consecutive months of loses.

Right after the announcement by 11:28 GMT the Euro was down against the dollar by 0.13 percent, hitting the 1.1179 level. Conversely, it went down against the Japanese Yen by 0.12 percent, falling to the 121.19 level. On the other hand, it went up against the Swiss Franc by 0.15 percent, hitting the 1.0854 level.

Investors are expecting the Eurozone Business climate indicator which is being published tomorrow, as well as November's unemployment rate which is expected to be published on Thursday.

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About the Author
Ibeth Rivero

Ibeth contributes daily market commentary in both English and Spanish (both of which she speaks fluently) and she also manages the DailyForex mobile app to ensure that traders around the world are getting important market updates in real time.

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