Euro Area inflation hits new high

The inflation in the euro area has significantly exceeded forecasts and reached a new high of 5.1 % compared to the same month last year. The release, one day before the ECB meeting, is likely to heighten investor excitement.

While inflation in the euro area still remains below that in the US, with the 5.1% published today it also remains significantly above the European Central Bank's inflation target of around 2% and 0.7% above the 4.4% expected according to forecasts. With the value published today, inflation is at its highest level since the introduction of the European common currency euro. Compared to the previous month, inflation rose by 0.3 percentage points, with a decline of 04, % expected.

The core rate of consumer prices, excluding energy and food and beverages, rose by 2.3 % in January. This was 0.3 % below the expected 2.6 %. Energy prices, which rose by 28.6 % compared to the same month of the previous year, continued to be the main reason for the high price increase. But at 3.6 %, the inflation rate for food and beverages is also well above the ECB's target.

After today's figures, investors are likely to eagerly await tomorrow's ECB meeting. According to its stance so far, the ECB is not planning any steps to curb the rising inflation. However, the persistently rising energy prices in particular could put some sectors of the economy in distress, so that after tomorrow's ECB meeting the first signals could be sent that the central bank could at least take measures to curb inflation if it continues to rise. Accordingly, the euro reacted with a rise after the figures and was able to climb back above the $1.13 mark. However, if the ECB does not show any willingness to curb inflation tomorrow, this rise could be reversed.

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