Economic Data from the Eurozone Deliver Mixed Results for the EUR

It was a busier day on the Eurozone economic calendar. Finalized December inflation figures for Eurozone and German wholesale inflation figures were in focus.

Eurozone Inflation

In December, the Eurozone’s annual rate of inflation picked up from 4.9% to 5.0%, which was in line with prelim figures.

Month-on-month, consumer prices increased by 0.4%. This was also in line with prelim figures. In November, consumer prices had also risen by 0.4%.

According to Eurostat,

• A year earlier the Euro area’s annual rate of inflation was -0.3%.
• The lowest annual rates of inflation were registered in Malta (2.6%) and Portugal (2.8%).
• Estonia (12.0%) registered the highest annual rate of inflation, followed by Lithuania (10.7%).
• The highest contribution to the annual euro area inflation rate came from energy (+2.46 percentage points), followed by services (+1.02 pp), non-energy industrial goods (+0.78 pp), and food, alcohol, & tobacco (+0.71 pp).

German Wholesale Inflation

In December, Germany’s annual wholesale rate of inflation accelerated from 19.2% to 24.2% versus a forecasted 19.4%.

Month-on-month, Germany’s PPI jumped by 5.0% versus a forecasted 0.8%. In November, the PPI rose by 0.8%.

According to Destatis,

• Year-on-year, the increase was the highest ever.
• Compared with December 2020, energy prices were up 69% and up by 15.7% compared with November 2021.
• Strong price increases of natural gas (distribution) and electricity drove energy prices.
• Excluding energy, the overall index was up 10.4% up on December 2020.
• Prices of intermediate goods increased by 19.3%, while prices of non-durable consumer goods rose by 4.7% compared with December 2020.

Market Impact

Ahead of today’s stats, the EUR had fallen to a pre-stat low $1.13456.

In response to Germany’s stats, the EUR rose to a post-stat and current day high $1.13690. Following the release of the Eurozone’s inflation numbers, however, the EUR fell to a post-stat and current-day low $1.13331.

At the time of writing, the EUR was down by 0.05% to $1.13372.

Next Up

The ECB’s monetary policy meeting minutes will be in focus ahead of jobless claims and Philly FED Manufacturing numbers from the U.S.

From the minutes, the markets will be looking for any chatter on inflation and interest rates.