RPT-Euro zone inflation shows biggest monthly fall in January

Mon Feb 24, 2014 5:06am EST

Related Topics

* Inflation drops m/m after slump in non-energy industrial
goods
    * Annual rate stuck at 0.8 pct for second month in a row

    By Martin Santa and Robin Emmott
    BRUSSELS, Feb 24 (Reuters) - Euro zone consumer prices fell
in January at their fastest ever pace on a monthly basis,
dragged down by a slump in the cost of non-energy industrial
goods, keeping annual inflation well below the European Central
Bank's target.
    Inflation rate in the 18 countries sharing the euro dropped
by 1.1 percent in January when compared with December, keeping
the annual inflation rate at 0.8 percent for a second month in a
row, the EU's statistics office Eurostat said.
    The annual inflation rate was revised from 0.7 percent,
which Eurostat released in a flash estimate on Jan. 31.
 
    Economists polled by Reuters expected consumer price
inflation to accelerate slightly to 0.9 percent in January, a
level that is still well below the ECB's target of close to but
below 2 percent.
    The annual rate was influenced by a 1.2 percent decline in
the highly volatile prices of energy, while the monthly decline
was hit by a 3.9 percent fall in prices of non-energy industrial
goods and a 0.4 percent drop in the price of services.
    The ECB, which cut its key interest rate to a record low of
0.25 percent in November, is expected to stay put until mid-2015
unless money market rates rise and the euro strengthens.
    Although ECB President Mario Draghi said the central bank
had not changed interest rates this month because of the need to
have more information about the economic recovery, markets are
still on alert for a move in March, when the updated inflation
outlook is due.
    In January, euro zone members Greece and Cyprus were stuck
in deflation. Only three countries in the bloc, Estonia, Latvia
and Slovakia, saw consumer prices rising month-on-month in
January.
    Italy, the euro zone's third largest economy, showed a 2.1
percent month-on-month decline, the biggest drop from among all
euro zone members.
    In Germany, Europe's largest economy, consumer prices fell
by 0.7 percent on the month, keeping the annual inflation rate
steady at 1.2 percent, with both figures coming below
expectations. 
    Eurostat will publish the euro zone's February inflation
flash estimate on Friday.
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