Downside Surprise, Sticky Core & Uncertainty in Jan Flash CPI

EUROZONE JAN FLASH HICP -0.4% M/M (FCST +0.1%); DEC -0.4% M/M

EUROZONE JAN FLASH HICP +8.5% Y/Y (FCST +8.9%); DEC +9.2% Y/Y

EUROZONE JAN FLASH CORE HICP -0.8% M/M, +5.2% Y/Y (FCST +5.1%); DEC +5.2% Y/Y

• Eurozone inflation cooled by 0.7pp to +8.5% y/y in the January estimate, 0.4pp lower than consensus expectations. Prices fell by -0.4% m/m, against expectations of a +0.1% m/m rise.
• Annualised inflation decreased across most of the bloc, however, further upticks were recorded in Spain, France, Austria, Estonia and Latvia.
• Of the key product groups, only food inflation continued to accelerate on the month.
• Core CPI failed to edge down from +5.2% y/y in January, remaining sticky at the euro-era high recorded in December. However, the -0.8% m/m decline in core is a positive signal for easing underlying pressures, reflecting the -1.8% m/m fall in non-energy industrial goods prices and -0.2% m/m decline in services prices.
• Note: this release contains a degree of uncertainty, due to the delay of German data which has been replaced with a Eurostat forecast. Germany has historically made up around 28% of the headline index.
• Eurozone unemployment data for December held steady at 6.6% (November revised up due to substantial upwards revision of Spanish data). This remains a record low for the bloc.