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MNI BRIEF: Expected Jan Inflation Spike Could Hinder ECB Comms

LONDON (MNI)

Eurozone inflation likely spiked higher in January and a number that sees year-on-year price rises firmly back into positive territory could make the European Central Bank's communication challenge trickier. Both France and Germany saw upside CPI surprises in the y/y readings last month, which, if carried over to the wider euro area, could see inflation post a y/y rise of 0.6%, after three consecutive months at -0.3%.

Stats agencies in Germany and France have largely played down the rises, pointing to the reinstatement of VAT in Germany and other one-off factors and the central bank is certainly prepared for an uptick. However, despite the likely upside, policymakers will look through the gains, happy in the bank's current projections and still seeing downward pressure ahead, despite an uptick in 2021.

MNI London Bureau | +44 203-865-3812 | les.commons@marketnews.com
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MNI London Bureau | +44 203-865-3812 | les.commons@marketnews.com
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