Eurozone CPI Downgraded To 0.3%

The final read of CPI for January doesn’t look too good: a downgrade of headline inflation to 0.3% y/y. Core inflation was confirmed at 1%. This adds to Mario Draghi’s headache.

EUR/USD remains stable in the immediate aftermath around 1.1015.

The final read of euro-zone inflation was expected to show no change from the original preliminary release: headline inflation at 0.4% y/y and core inflation at 1%.

EUR/USD was struggling to hold onto 1.10 before the release. Support awaits at 1.0960 and resistance is at 1.1070.

Headline inflation can be easily blamed on falling oil prices, even though the impact of the big fall seen in early 2015 is beginning to fade away and this base effect is gradually moving out. Core inflation does not provide too much hope either: while it is off the deep lows of 0.6% seen in 2015, 1% is also far from the “2% or a bit below” target of the ECB.

Tomorrow we will get initial inflation figures from Germany for the month of February and see if anything has changed.