Euro area January flash inflation: no signs of relief (yet) regarding core inflation

Euro area headline flash inflation increased to 2.5% Y/Y in January from 2.4% in Dec ember, slightly above market expectations . Core inflation remained stable at 2.7% for the fifth month in a row. Services inflation slightly declined to 3.9% but has been broadly unchanged for more than one year, show ing signs of stickiness. Non-energy industrial goods inflation remained unchanged at 0.5% . Energy prices continue to accelerate to 1.8% from +0.1% due to base effects and the fourth increase in a row for oil prices In January ( to 73,7€/bl on average for the Brent , highest since July 2024) . Croatia recorded the highest inflation rate ( 5.0 %) alongside with Belgium (4.4%) while Ireland (1. 5 %) , Finland (1.6%) and Italy (1. 7 %) recorded the lowest ones . ► Germany : He adline HICP remained stable at 2.8% Y/Y in January, in line with expectations. C ore inflation - measured by the national index – decreased to 2.9% from 3.3%, with a slight decrease in services prices (4.0% from 4.1% and a marked decline in goods prices (0.9% from 1.4% in Dec) . ► France : F rench HICP remained stable in January at 1.8% Y/Y, slightly below our and consensus expectations. S ervices prices (national index) slow ed down markedly to 1.9% from 2.2% . The Insee stated this was linked to a fall in prices of transport s services despite a further rise in insurance prices . ► Italy : Inflation increased in January to 1.7% from 1.4%. Without details at this stage, Istat indicated that the increase in prices was due to the prices of regulated energy products and non-regulated energy prices. Prices for services may have slowed down. ► Spain : In January, inflation increased to 2.9%, up from 2.8% in December. This is primarily due to the increase in fuel prices compared to January 202 4 , when they had decreased. Prices for entertainment and leisure have decreased compared to a year ago, counteracting this trend. According to the statistical office, national core inflation may have decelerated by 0.2 percentage points . We continue to expect three more 25bp cuts by the ECB until the terminal rate of 2% is reached in June ( see ECB January meeting: disinflation remains on track ) .