The annualized Eurozone Consumer Price Index (CPI) rises by 5.0% in December, surprising markets to the upside while a tad higher from the previous jump of 4.9%, the latest data published by Eurostat showed on Tuesday. The consensus forecast was for a drop to 4.7%.

The core figures arrived at 2.6% YoY in December when compared to 2.5% expectations and 2.6% registered in November.

Earlier this week, Reuters reported that long-term Eurozone inflation expectations rose above 2.0% for the first time since late October 2021.

The Euro area figures come a day after Germany’s annual inflation eased for the first time in six months, arriving at 5.7% following a record increase of 6.0% in November.

Key details (via Eurostat)

“Looking at the main components of euro area inflation, energy is expected to have the highest annual rate in December (26.0%, compared with 27.5% in November), followed by food, alcohol & tobacco (3.2%, compared with 2.2% in November), non-energy industrial goods (2.9%, compared with 2.4% in November) and services (2.4%, compared with 2.7% in November).”

EUR/USD reaction

EUR/USD is testing highs on unexpectedly hotter Eurozone inflation. The spot is currently adding 0.24% on the day, trading at daily highs near 1.1320.