The lowest annual rates were registered in France (3.3 per cent), Portugal (3.4 per cent) and Sweden (3.9 per cent). The highest annual rates were recorded in Lithuania (12.3 per cent), Estonia (11.0 per cent) and the Czech Republic (8.8 per cent).

Compared with December, annual inflation fell in eight EU member states and rose in 19. In January, the highest contribution to the annual euro area inflation rate came from energy (+2.80 percentage points, or pp), followed by services (+0.98 pp), food, alcohol and tobacco (+0.77 pp), and non-energy industrial goods (+0.56 pp).

According to Dutch multinational banking and financial services corporation The ING Group, the decline in core inflation is more in line with expectations and shows very little evidence of second-round effects in the eurozone so far.

Concerns about future second-round effects remain valid as energy inflation keeps the inflation rate at a higher level for now, it said in a press release.

The dropping core inflation rate confirms that the high inflation rate is not yet spreading and that the pass-through of high producer prices remains more modest than expected. Goods inflation fell back to 2.3 per cent and services inflation stayed put at 2.4 per cent. This shows that there is still no evidence of widespread second-round effects happening at the moment, it added.

Fibre2Fashion News Desk (DS)