Inflation rate falls noticeably in January

The inflation rate in the euro area fell more sharply than expected at the beginning of the year. In January, consumer prices climbed by 8.5 percent within a year, according to a first estimate from the statistics office Eurostat on Wednesday. Inflation was 9.2 percent in December and 10.1 percent in November.

The European Central Bank (ECB) is likely to take the slowdown in inflation before its interest rate decision on Thursday with some relief, although there is no reason to give the all-clear yet. The inflation rate is still miles away from the ECB's target of two percent.

Energy prices also fueled inflation in January, although the rise in prices was not as strong. Energy prices rose by 17.2 percent year-on-year after 25.5 percent in December. Food, alcohol and tobacco prices rose 14.1 percent from 13.8 percent in December. Non-energy industrial goods rose 6.9 percent in January. In December, the increase was only 6.4 percent. And services rose at the beginning of the year by 4.2 percent after 4.4 percent in December.

Eurostat has made an estimate for the consumer price data for Germany, as the Federal Statistical Office postponed the publication of the January data due to a technical problem. The development of inflation in the euro zone is a key decision-making criterion for the ECB.

Experts are assuming that the currency watchdogs around central bank chief Christine Lagarde will raise the key rates by half a percentage point on Thursday, as they did in December. The interest on deposits, which is decisive on the financial markets and which banks receive from the central bank for parking excess funds, is currently still 2.0 percent.

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