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Energy prices fell in January, helping to keep inflation low.

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Eurozone investors are hoping for good news on interest rates soon amid signs of easing inflation. This would mean some much-needed relief from rising food costs. energy pricesWhich has been affecting the Eurozone since the beginning of the Russia-Ukraine war in February 2022.

Annual consumer prices fell from 2.9% to 2.8% in December 2023, in line with the consensus estimate in the January 2024 Flash Inflation Projections report.

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Core inflation, which does not take into account energy and food prices, also eased to 3.3% from 3.4% last month, still slightly above analyst estimates of 3.2%. Month-on-month inflation declined from 0.2% to -0.4%.

Energy prices declined to 6.3% from -6.7% in the previous months, while services prices remained more or less stable at 4%. Alcohol, food and tobacco prices declined from 6.1% to 5.7% in December. Non-energy industrial goods also declined in January, falling to 2% from 2.5% in December.

Eurozone unemployment hits historic low

The unemployment rate in the eurozone also fell to a record low of 6.4% in December, as expected. Among the euro zone’s largest economies, Germany had the lowest unemployment rates at 3.1%, followed by Italy at 7.2% and France at 7.3%. However, what is worrying is that Spain had the highest unemployment percentage at 11.7%.

The number of unemployed people in the euro zone fell by 17,000 to 10.909 million. The percentage of people under 25 without a job decreased slightly in December to 14.4%, from 14.5% in the previous month.

Although some investors are still expecting an interest rate cut by April this year, others expect the monetary easing to be postponed until the summer or even later. The European Central Bank (ECB) is also adopting a very cautious attitude towards cutting interest rates.

ECB maintains data-reliant approach to inflation fight

ECB President Christine Lagarde highlighted on CNN on January 30: “We are not there yet. We need all types of data, but one of them is critically important – it is data on wages.”

Lagarde later told CNN about her inflation control plan, saying: “I want to reach 2% permanently so that people shopping on the street and going to the petrol pump will appreciate that We are working for them.”

As such, the ECB has reiterated that it will continue to take data-dependent approach When it comes to the fight against inflation.

German and French inflation Both declined in January, raising hopes that some of the euro zone’s largest economies may now be on the path to recovery.

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