Consumer prices provisionally fell slightly more sharply than expected in January. Even so, with base effects positive, a 0.6 percent monthly decline still saw the annual inflation rate climb a further 0.2 percentage points to 1.9 percent, equalling its strongest mark since December 2012.
The flash HICP largely followed suit with a rather sharper 0.8 percent increase versus December that also lifted its yearly rate from 1.7 percent to 1.9 percent.
The CPI is seasonally soft at the start of the year and January saw the usual hefty monthly decreases in the prices of package holidays (about 20 percent) and clothing and footwear (around 5 percent). Household energy charges were little changed on the month but weakness a year ago saw the annual inflation rate here more than double to 5.8 percent. Goods inflation was up almost a percentage point at 2.7 percent and food accelerated from 2.5 percent to 3.2 percent. Rent, excluding utilities, also edged a tick firmer to 1.6 percent but, significantly, service sector inflation reversed most of December's bounce in falling 0.3 percentage points to 1.2 percent.
Today's German data increase the likelihood of another rise in Eurozone inflation this month (flash data due tomorrow). However, with base effects from energy particularly important, the core rates will need to be watched all the more closely to determine the underlying trend.