German January CPI drops more than expected

The cost of living in Germany fell much more sharply than expected at the start of 2019.

Headline consumer prices in the Eurozone's largest economy dropped by 0.8% month-on-month, according to the Federal Office of Statistics.

That pushed the year-on-year rate of increase down from December's pace of 1.7% to 1.4% (consensus: 1.6%).

On a harmonised basis, CPI was 1.0% lower versus December but with the annual rate of gains steady at 1.7% (consensus: 1.8%).

To take note of, starting from January, the base year for CPI was changed from 2010 to 2015.

Following Wednesday's data, Fabio Fois at Barclays Research opted to keep his forecast for euro area-wide year-on-year harmonised CPI for January at 1.3%.

Market consensus meanwhile was for a drop from 1.6% in December to 1.4%.

Euro area core CPI on the other hand was seen edging up by a tenth of a percentage point to 1.1% (consensus: 1.0%).

As of 1415 GMT, euro/dollar was off by 0.21% to 1.1410.