2018.01.3107:56:00UTC+00Eurozone Inflation Eases On Energy Prices

Eurozone inflation slowed as expected on lower energy prices at the start of the year, giving more time for the central bank to start tightening.

Headline inflation came in at 1.3 percent in January, in line with expectations, but weaker than December's 1.4 percent, flash data from Eurostat revealed Wednesday.

The inflation figure continues to stay below the European Central Bank's target of 'below, but close to 2 percent'.

Excluding energy, food, alcohol and tobacco, core inflation rose marginally to 1 percent from 0.9 percent in December.

Inflation is expected to converge only very gradually to levels closer to 2 percent, Benoit Coeure, ECB executive board member, said in Dublin on Wednesday.

For this reason, an ample degree of monetary stimulus remains necessary for underlying inflation pressures to continue to build up. Coeure expects the ECB's key interest rates to remain at their present levels for an extended period of time, and well past the horizon of net asset purchases.

As the fall in inflation in January largely reflected energy effects, it won't be a major concern to the ECB, Jack Allen, an economist at Capital Economics, said.

The upshot is that the ECB is likely to tread very carefully when it comes to normalizing monetary policy, the economist added.

Another report from Eurostat showed the euro area unemployment rate held steady at the lowest level in 8 years in December.

The jobless rate remained stable at seasonally adjusted 8.7 percent, the lowest since January 2009.

The number of unemployed totaled 14.137 million in December, down by 134,000 from November. On a yearly basis, unemployment declined by 1.536 million.

The youth unemployment rate eased to 17.9 percent from 18.1 percent in November.

In EU28, the unemployment rate was 7.3 percent in December, stable compared to November. This was the lowest rate registered in the region since October 2008.

In Germany, the unemployment rate declined to a record low of 5.4 percent in January, the Federal Labor Agency reported. The number of people out of work decreased by 25,000 compared to the expected fall of 17,000.