The annualized Eurozone Consumer Price Index (CPI) jumps by 5.1% in January, surprising markets to the upside while a tad higher from the previous increase of 5.0%, the latest data published by Eurostat showed on Tuesday. The consensus forecast was for a softer reading of 4.4%.

The core figures arrived at 2.3% YoY in January when compared to 1.9% expectations and 2.6% booked in December.

The Euro area figures come a couple of days after Germany’s annual inflation for January rose above expectations of 4.7%, arriving at 5.1% following a 5.7% increase reported in December.

The bloc’s CPI figures hold significance, as it helps investor assess the chances that the European Central Bank (ECB) might signal a faster than the expected path for policy tightening. The ECB is due to announce its interest rate decision on Thursday.

Key details (via Eurostat)

“Looking at the main components of euro area inflation, energy is expected to have the highest annual rate in January (28.6%, compared with 25.9% in December), followed by food, alcohol & tobacco (3.6%, compared with 3.2% in December), services (2.4%, stable compared with December) and non-energy industrial goods (2.3%, compared with 2.9% in December).”

EUR/USD reaction

EUR/USD briefly recaptured 1.1300 on unexpectedly hotter Eurozone inflation. The spot is currently adding 0.27% on the day, trading at 1.1299.