Euro-zone inflation rises as joblessness falls and growth accelerates

Euro-zone inflation jumped more than expected in January on a surge in energy prices as economic growth accelerated and unemployment fell to its lowest level in more than seven years, data from the European Statistics office showed on Tuesday.

Inflation in the 19 countries sharing the euro accelerated to 1.8 per cent year-on-year this month, Eurostat estimated, up from 1.1 per cent in December, reaching the European Central Bank’s medium-term target of below, but close to 2 per cent.

It was the highest rate since February 2013.

But core inflation, which excludes volatile prices of energy and unprocessed food and which the ECB looks to in its policy decisions, was stable at 0.9 per cent year on year in January, suggesting no immediate change to the central bank’s bond-buying programme.

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Unprocessed food

Energy prices jumped 8.1 per cent year on year in January after a 2.6 per cent increase in December, and unprocessed food was 3.3 per cent more expensive than a year earlier.

Separately, Eurostat said euro-zone gross domestic product rose 0.5 per cent quarter on quarter in the last three months of 2016, as expected by markets, for a 1.8 per cent year-on-year rise.

In the whole of 2016, euro-zone GDP rose 1.7 per cent.

The stronger economic growth also helped bring down euro-zone unemployment to 9.6 per cent, the lowest rate since May 2009, when the Greek debt crisis had not yet hit the bloc.