The annualized Eurozone Harmonised Index of Consumer Prices (HICP) comes in a tad softer at 8.5% in February vs. January’s 8.6%, the latest data published by Eurostat showed on Thursday. The market expected the inflation gauge to ease to 8.2% in the reported period.

The core HICP climbs to 5.6% YoY in February when compared to 5.3% expected and 5.3% seen in the January reading.

On a monthly basis, the old continent’s HICP unexpectedly jumped by 0.8% in February vs. -0.3% expectations and -0.2% previous. The core HICP arrived at 0.8% last month as against the 0% expected and -0.8% registered in January.

The Euro area inflation data is featured a trading day after Germany’s annual HICP for February, which rose by 9.3%, beating 9.0% estimates while following a 9.2% increase seen in January.

The ECB inflation target is 2%.

The bloc’s HICP figures hold significance, as it would help investors reprice the European Central Bank’s (ECB) rate hike expectations. Market expectations currently attach a 65% probability to a 50bp hike in May, with a 50 bps March rate hike almost a done deal, as endorsed by several ECB policymakers.

Key details (via Eurostat)

“Looking at the main components of euro area inflation, food, alcohol & tobacco is expected to have the highest annual rate in February (15.0%, compared with 14.1% in January), followed by energy (13.7%, compared with 18.9% in January), non-energy industrial goods (6.8%, compared with 6.7% in January) and services (4.8%, compared with 4.4% in January).”

EUR/USD reaction

The shared currency is a little impressed by the hotter-than-expected Eurozone inflation data, as EUR/USD keeps its range near daily lows of 1.0618. The spot is shedding 0.36% so far.