Euro zone inflation rises to hotter-tha-expected 2.5% in January on energy price hike

The Euro Zone Inflation Accelerated to a Hotter-That-Expected 2.5% in January on Annual Basis as Energy Costs Jumped, Flash data from statistics agency Eurostat Showed Monday.

Economists Pollled By Reuters Had Expected The January Inflation Print to come in at 2.4%, Unchanged from December,

So-Called Core Inflation, Which Strips Out Food, Energy, Alcohol and Tobacco Prisies, Came in at 2.7% in January and Has Remained Unchanged SINCE SEPTEMBER. The Closely Watched Services Inflation Print Meinwhile Inched Lower to 3.9% in January from 4% in December.

Energy costs however jumped, rising 1.8% from a year earlier. This was up sharply from December’s 0.1% Increase.

Both Energy Pries and Core Inflation Came in Higher Than Anticipated, While The Dip in Services Inflation was Smaller Than Hoped for, Jack Allen-Reynolds, Deputy CHIEF EURO Zone EURO Zone Economist Monday.

“Services inflation has been stuck Around 4% for over a year,” He pointed out, noting that it was different to predict when it would ease.

Headline Inflation in the Euro Zone Hit a low of 1.7% in September, but has since re-accelerated as base Effects from Lower Energy Prices have faded. The European Central Bank Last Week Said Disinflation “is Well on Track.”

“Inflation has Continued to Develop Broadly in Line with the Staff Projections and is set to return to the governing council’s 2% Medium-Term Target in the Course of this year,” The bank added. “Most Measures of Underling Inflation Sugged that Inflation will settle at Around the target on a sustained basis.”

The ECB on Cut Interest Rates by 25 Basis Points, Bringing The Key Deposit Facility Rate to 2.75%. Further Rate Reductions are expected from the eCB through the year.

Capital Economics ‘Allen-Reynolds Said That The Latest Inflation Data “Won’T Change ECB Policymakers’ Minds about the Likely Near-Term Path for Interest Rates.”

“The fact that services inflation remained high will mean that they will prefer to Loosen Policy in Small Steps,” He said.

Inflation is likely to reach close to the 2% eCB target by the summer and even Fall Lower Later in the year, Allen-Reynolds Estimated. He added that the net effect of potential tariffs imposed on Goods Imported to the US from the Eu – Along with Possible retaliator Duties from the European Commissionsion or

Bert Colijn, Netherlands Chief Economist at Ing Expressed More Caution About The Impact of Such Tarifs.

“Retaliatory tariffs would add to inflation against as tarifs usually result in higher consumer prices,” He Said Monday, Adding that this meant inflation

“With Inflationary Risks Still Prevalent and Uncertainty Increasing, The Question is how low the ecb can push rates to give the economy more breathing room,” Colijn said.

The Monday Data Comes after Several Key Euro Zone Economies, Including France and Germany, Last Week Reported Their Latest Consumer Price Index Data. The annual rate hit 1.8% in France and 2.8% in GermanyAccording to preliminary data from the country’s statistics agencies. The figures are harmonized across the euro zone for comparability.