Germany: Annual HICP jumps to 1.6% in January vs. 0.5% expected
- Annual HICP in Germany rose sharply in January amid changes in VAT.
- EUR/USD trades in the negative territory a little below 1.2100.
Inflation in Germany, as measured by the Consumer Price Index (CPI), was 0.8% in January, Destatis reported in its flash estimate on Thursday. Moreover, the annual CPI rose to 1% from -0.3% in December.
Additionally, the Harmonized Index of Consumer Prices (HICP), the European Central Bank's (ECB) preferred gauge of inflation, jumped to 1.6% on a yearly basis and surpassed the market expectation of 0.5% by a wide margin. However, this surprising increase in inflation is largely attributed to the changes in VAT that came into effect in January.
In July, Germany reduced the VAT to 16% from 19% and the standard rate to 5% from 7% until the end of December due to the coronavirus crisis.
Market reaction
The EUR/USD pair showed no immediate reaction to this report and was last see posting small daily losses at 1.2096.
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
