Eurozone: Softer inflation underpins Euro rates outlook – BNY

BNY’s Head of Markets Macro Strategy Bob Savage highlights that Eurozone January inflation eased to 1.7% year-on-year, with EU inflation at 2.0%. Services remain the main positive contribution, while energy drags. Bob Savage notes that inflation declined in most member states, reinforcing a disinflationary trend that shapes expectations for Euro area rates and supports Eurozone government bond markets and equities.

Disinflation trend across Euro area

"Eurozone’s January inflation rate eased to 1.7% y/y from 2.0% in December, down from 2.5% a year earlier, while EU inflation slowed to 2.0% y/y from 2.3%, compared with 2.8% previously."

"The lowest annual rates were recorded in France (0.4%), Denmark (0.6%) and Finland and Italy (both 1.0%), while Romania (8.5%), Slovakia (4.3%) and Estonia (3.8%) registered the highest."

"Compared with December, inflation decreased in 23 member states, was flat in one and increased in three."

"Services contributed the most to euro area inflation (+1.45 percentage points), followed by food, alcohol and tobacco (+0.51 percentage points), while energy exerted a negative contribution (-0.39 percentage points)."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)