Yahoo Finance Inflation in euro area eases to 2.8% in January
The annual inflation rate in the eurozone came in at 2.8% in January, down from 2.9% registered in December but above the European Central Bank's target of 2%.
In the European Union, the consumer price index (CPI) stood at 3.1%, falling from the previous month's 3.4%, according to Eurostat, the EU’s statistical body.
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The annual core inflation rate in the euro area, which strips volatile food and energy prices, eased for the 6th straight month to 3.3% in January, the lowest since March 2022, down from 3.4% in the prior month.
The lowest annual rates were registered in Denmark, Italy (both 0.9%), Latvia, Lithuania and Finland (all 1.1%). The highest annual rates were recorded in Romania (7.3%), Estonia (5.0%) and Croatia (4.8%).
In January, the highest contribution to the annual euro area inflation rate came from services (+1.73 pp), followed by food, alcohol & tobacco (+1.13 pp), non-energy industrial goods (+0.53 pp) and energy (-0.62 pp).
Despite being above the ECB’s target, investors have been betting that the central bank will cut rates quite soon – possibly in April.
Last month, the European Central Bank held interest rates at a record-high 4% and reaffirmed its commitment to fighting inflation.
"The consensus around the table was that it was premature to discuss rate cuts," ECB President Christine said at the time, insisting that future decisions would depend on incoming data.
"We need to be further along the disinflation process to be confident that inflation will be at target – sustainably so."
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Meanwhile, the downturn in the eurozone has eased as the service sector stabilised, but price pressures have picked up again, according to a closely-watched survey.
Business activity declined at the slowest rate for eight months in February, according to provisional PMI survey data from Hamburg Commercial Bank, as a stabilisation of output in services offset a further steep downturn in manufacturing.
“There is a glimmer of hope as the euro zone inches towards recovery. This is particularly noticeable in the services sector,” said Norman Liebke, economist at Hamburg Commercial Bank.
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