Eurozone inflation fell again in February to 2.6%

Eurozone annual inflation stood at 2.6% year on year in February, two tenths below the Community Consumer Price Index in January, according to preliminary data released today by community statistics office Eurostat.

Eurozone inflation slowed for the second time in a row since January, when it fell by a tenth from the previous month to 2.8%, while core inflation fell by the same amount to 3.3%.

Lower energy prices contributed to the fall in February, although it was slightly less than in January – 3.7% versus 6.1% in the first month of the year.

The year-on-year fall in energy prices slowed to 3.7% from 6.1% in January, while fresh produce rose 2.2%, well below the 6.9% rise in the first month of the year.

Prices fell last month from increases seen a year ago for all major components. basket In the second month of the year: food, alcohol and tobacco registered inflation at 4.0%, lower than the 5.6% level observed in February, followed by services with an increase of 3.9%, up one tenth lower than in February; and non-energy industrial goods, which were rated at 1.6%, up from the previous 2.0%.

In turn, annual growth in the cost of services fell to 3.9% from 4%, and growth in prices for non-primary industrial goods slowed to 1.6%, four-tenths less than in January.

From my side, Core inflation – which excludes the impact of energy and food as they are the most volatile – also fell two-tenths in February to 3.1%.

Excluding the impact of energy, inflation was 3.3%, down from 3.8% in January 2024, and excluding food, alcohol and tobacco, the base rate fell to 3.1% from 3.3%, the lowest level since March 2022 (3%).

Among EU countries for which Eurostat data is available, inflation averaged above 2.6% in all major economies except Italy, where it remained at 0.9%.

Among eurozone countries, the highest inflation rates in February were observed in Croatia (4.8%), Estonia (4.4%) and Austria (4.2%), while the lowest price growth was observed in Latvia (0.7%). Italy (0.9%). and Lithuania (1.1%).

Elsewhere in the eurozone, inflation in February was 2.7% in Germany and 3.1% in France, below price increases of 3.1% and 3.4% respectively.

In the case of Spain, the harmonized inflation rate was 2.9% in February, down from 3.5% in January, reducing the country’s unfavorable price differential relative to the eurozone average to three tenths.

In Spain, inflation fell by six tenths in February to 2.9%, in France by three tenths to 3.1%; and in Germany and the Netherlands it fell by four-tenths, to 2.7% in both cases.

ECB decision

Data on improving inflation in the eurozone will be released the day before Governing Council of the European Central Bank will hold a meeting on March 7 where interest rates are not expected to fall, pending further data confirming that the downward path will continue and there will be no new increases.

In recent speeches, the institution’s president, Christine Lagarde, has insisted that they expect inflation to continue to fall and wage data so far is “encouraging” but they still need more information to be confident that the level will reach achieving the 2% target in the medium term on a sustainable basis.

“The last thing I would like is for us to make a hasty decision, for inflation to rise again and for us to have to take additional measures,” he recently warned before the European Parliament.

The benchmark interest rate has remained at 4.5% since September, along with the credit line, which provides overnight loans to banks, at 4.75% and the deposit line, which rewards exceeding overnight bookings, at 4%.