January inflation fell in 9 of the 16 advanced economies compared in the Harmonized Index of Consumer Prices (HICP) published by the Conference Board. The European Central Bank, like most other major economies’ central banks, has a target of 2% annual inflation for the Eurozone, which is way higher than current rates within the currency block.
Inflation fell the most in January 2014 in the Netherlands (to 0.8% from 1.4%), Austria (to 1.5% from 2%), and Japan (to 1.6% from 1.9%).
Eurozone January inflation held steady
Among the economies in the Eurozone, January inflation held steady in Spain, France and German compared to December, and declined in Belgium and Italy.
Elizabeth Crofoot, Senior Economist with the International Labor Comparisons program at The Conference Board, said:
“Driven by stable prices in the euro area’s largest economies, inflation in the monetary union as a whole remained unchanged in January. This trend, however, masks slowing price growth in Austria, Belgium, Italy, and the Netherlands.”
“The continued threat of deflation means that euro area countries cannot yet give an economic sigh of relief as we head into 2014.”
January inflation rates, the highest and lowest
Norway, Japan and the United Kingdom had the highest inflation rate in January, while Switzerland and Sweden had the lowest.
An inflation rate of lower than 1% for January was registered in nine of the 16 economies. In the Netherlands, inflation dipped below one percent for the first time since June 2010.
The UK Office of National Statistics announced last month that UK inflation fell below 2% in January for the first time in four years to 1.9%.
The UK’s economy is on a rebound and there had been rumors that the Bank of England (BoE) would raise interest rates. Recently, however, the BoE announced that it is in no hurry to raise its benchmark rate.
Despite a strong increase in consumer spending in the United States, its inflation rate remains stubbornly low. A price index for consumer spending rose 0.1% in January versus 0.2% in December. Over a 12-month period ending in January, US prices have increased by 1.2% compared to 1.1% in December. The US Federal reserve is also aiming for 2% inflation rate.