Annual inflation in the eurozone defied market forecasts of a rebound in January, staying below 2 per cent, and inflation expectations among consumers dropped substantially, data showed today.
The European Union's statistics office Eurostat estimated inflation in the 13 countries sharing the euro was 1.9 per cent year-on-year in January, the same as in December.
The Central Statistics Office consumer price index shows that Irish annual inflation averaged 4 per cent last year.
Eurostat does not provide monthly figures or a breakdown by country with its flash estimate, but economists said the already weaker than expected pass-through of the German VAT hike to consumers was likely to be offset by lower oil prices.
A monthly confidence survey among consumers and businesses by the European Commission showed inflation expectations among households over the next 12 months fell to 23 points in January from 27 in December, returning to a long-term average.
The decline in inflation expectations, an indicator the European Central Bank monitors closely in its drive to keep consumer price growth just below 2 per cent, comes despite a further fall in euro zone unemployment in December. Eurostat said the number of jobless fell to 7.5 per cent of the workforce last month - the lowest since Eurostat measurements for the area started.
The Commission's survey showed that expectations of selling prices among business inched marginally higher to 14 from 13 in December. The overall economic sentiment indicator eased more than economists had expected in January to 109.2 from a downwardly revised 109.8 in December.
The decline was caused by weaker confidence among consumers, where the index eased to -7 from -6, and in the retail trade sector, where it eased to -1 from 0. Sentiment in industry also worsened slightly to 5 points from 6 and in construction - down to 1 from 2. The only sector where optimism was higher was in services, where it increased to 20 from 19.