Eurozone inflation falls in January as energy prices continue to drop

Eurozone inflation has fallen to 1.4 per cent as energy prices continue to drop across the single currency bloc but core inflation rose slightly.

The euro area consumer price index (CPI) fell to 1.4 per cent year-on-year in January from 1.5 per cent the previous month, and significantly down on its 2.3 per cent October high.

Read more: The Eurozone’s push for unified fiscal discipline is doomed to fail

Energy prices rose 2.7 per cent in the year to January compared with 5.5 per cent in the year to December.

Consumer prices fell one per cent month-on-month, the EU's statistical office Eurostat said.

Core inflation, which excludes volatile prices such as energy and is monitored by the European Central Bank (ECB) with a view to monetary policy decisions, edged up to 1.2 per cent year-on-year from 1.1 per cent in December.

"Until the trade situation in China is resolved and the global economy emerges from the current slowdown, the EU economy will remain subdued and inflation reflects this," Nancy Curtin, from Close Brothers Asset Management said.

Read more: Is this a EU turn in the Eurozone's economic prospects?

"The ECB will no doubt be considering how to boost inflation and growth, but monetary policy has run out of road.

"[ECB President Mario] Draghi is right to be cautious in his approach; given their importance to the Eurozone economy, a 'wait and see' attitude ahead of the Chinese trade talks is sensible," she added.