European inflation softens in January
Eurozone inflation remained low last month, dropping slightly more than expected as energy prices dimmed.
Consumer price inflation in the eurozone fell to 1.4% in January, from 1.6% in December, while the market had been looking for a dip to 1.5%.
Earlier this week, several major European economies had reported a slide in inflation compared to December, with France down 0.4 percentage points, Germany's down 0.3pp and Spain 0.2pp.
Fuel prices grew by 2.6% year on year in January, down from 5.4% in December, while followed by food, alcohol & tobacco prices were up 1.8%, services up 1.6% and non-energy industrial goods up 0.3.
Encouragingly, core inflation raised albeit only modestly to 1.1%, versus 1.0% the month before.
The reading is "quite weak, considering the strength in the labour market and the increase in wages taking place across most countries" said Oxford Economics, though the economists continue to expect core inflation should gradually rise this year.
"We still expect ECB to hike rates in Q4 2019, but we acknowledge the increased risks for a later hike, particularly if core inflation fails to rise as expected. On the upside though, weak headline inflation should help support consumption in 2019, which we expect to be one the main drivers of growth amid cooling external demand."