In January, CPI came out in line with expectations rising by 0.3% M/M. The December outcome was downwardly revised from -0.7% M/M from -0.8% M/M. Looking at the details, gasoline rose by 6.0% M/M and also tobacco (0.8% M/M), education (0.3% M/M) and medical care (0.4% M/M) were rising. On a yearly basis, prices were flat, while the consensus was looking for a slight decline. Core CPI, excluding food and energy, rose by 0.2% M/M and by 1.7% Y/Y, following a 1.8% Y/Y increase in December. This is the first monthly increase after three straight declines and might be due to the fact that January is traditionally a month of price increases. Inflation will tumble sharply in negative territory in the next few months.


EMU: Both manufacturing and services PMI set new record low

Manufacturing PMI showed a slight drop in February, while the consensus was looking for a modest rise. The headline index fell from 34.4 to 33.6 against the expectation of 35.0. The details show a decline in new orders (28.4 from 29.1), export orders (30.8 from 31.4), output (31.2 from 31.4) and employment (37.3 from 35.9). Services PMI showed an even bleaker picture. The headline index plunged to 38.9 (from 42.2), the lowest figure on record and every single sub-index dropped to a new record low. New business (36.3 from 39.6) showed the sharpest drop, but also employment dropped significantly, while the drop in outstanding business was more muted. Both input prices and prices charges decline further. These data indicate that the worst is not yet over after signs of stabilization in January.


Other: Retail sales surprise again on the upside

In the UK, retail sales surprised again on the upside in January, showing the third consecutive monthly rise. On a monthly basis, retail sales rose by 0.7% M/M, while the consensus was looking for a slight decline. The details show that there was sharp rebound in textile, clothing & footwear (6.1% M/M) and other stores (6.0% M/M). Household goods stores (-4.8% M/M) and non-specialised stores (-3.7% M/M) fell significantly. These data indicate that shoppers were attracted by large discounts, but economists started to question the reliability of the series after the upward surprised in the previous months.