Euro-Zone Inflation Outlook Falls Further, Unemployment Rises For Fifth Month

Daily Forex Fundamentals | Written by DailyFX | Jan 30 09 10:38 GMT |

Euro-Zone Jan HICP inflation decelerated to 1.1% y/y from 1.6% y/y in December. Our median was 1.4% y/y, so data were lower than expected, but the sharp decline was not a total surprise after weaker than expected German and Spanish data. The headline rate has fallen to the lowest level since July 1999, mainly on the back of positive base effects from sharply lower energy prices. Numbers will add to public pressure on the ECB to cut rates again, even though ECB policy has to be forward looking and should not react to historical data. The ECB currently expects inflation to rise again in H2 on base effects. Meanwhile, Euro-Zone December unemployment rose to 8.0% from 7.8% in November. Expectations had been for a reading of 7.9%, but after the marked rise in German unemployment numbers the jump was not a surprise. With the German labor market catching up with the contracting economy unemployment figures are likely to rise sharply this year and the negative impact will counterbalance to a large extent the improvement in real disposable income from lower energy prices. DailyFX Disclaimer Investment in the currency exchange is highly speculative and should only be done with risk capital. Prices rise and fall and past performance is no assurance of future performance. This website is an information site only. Accordingly we make no warranties or guarantees in respect of the content. The publications herein do not take into account the investment objectives, financial situation or particular needs of any particular person. Investors should obtain individual financial advice based on their own particular circumstances before making an investment decision on the basis of the recommendations in this website. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. All intellectual property rights are the property of Daily FX. Daily FX and its affiliates, will not be held responsible for the reliability or accuracy of the information available on this site. The content herein is provided in good faith and believed to be accurate, however, there are no explicit or implicit warranties of accuracy or timeliness made by Daily FX or its affiliates. The reader agrees not to hold Daily FX or any of its affiliates liable for decisions that are based on information from this website. Daily FX highly recommends that before making a decision, the reader collects several opinions related to the decision and verifies facts from at least several independent sources.