Eurozone Preliminary HICP inflation drops to 2.6% YoY in February vs. 2.5% expected

The Eurozone annual Harmonised Index of Consumer Prices (HICP) rose 2.6% in February, cooling from a 2.8% increase in January, the official data published by Eurostat showed on Friday. The market forecast was for a 2.5% growth in the reported period.

The Core HICP inflation fell further to 3.1% YoY in February, compared with January’s 3.3% reading, beating expectations of 2.9%.

Over the month, the bloc’s HICP rebounded 0.6% in February vs. a 0.4% decrease reported in January. The core HICP inflation arrived at +0.7% MoM in the same period, as against a 0.9% decline seen previously.

The European Central Bank’s (ECB) inflation target is 2.0%. The old continent’s HICP inflation data significantly influences the market’s pricing of the ECB interest rate outlook.

Key details from the Eurozone inflation report (via Eurostat).

Looking at the main components of euro area inflation, food, alcohol & tobacco is expected to have the highest annual rate in February (4.0%, compared with 5.6% in January), followed by services (3.9%, compared with 4.0% in January), non-energy industrial goods (1.6%, compared with 2.0% in January) and energy (-3.7%, compared with -6.1% in January).

Separately, the Eurozone Unemployment Rate ticked lower to 6.4% in January vs. December’s revised 6.5%.

EUR/USD reaction to the Eurozone inflation report

The Euro is unperturbed by the hotter-than-expected Eurozone inflation data. EUR/USD is trading 0.12% higher on the day at 1.0813, at the press time.