Euro Area: Harmonized inflation falls in February
Latest reading: Harmonized inflation fell to 2.3% in February, following January’s 2.5%. Looking at the details of the release, prices for energy and services increased at a more moderate rate, although prices for food, alcohol and tobacco rose at a faster pace in February.
Annual average harmonized inflation remained at January’s 2.3% in February. Meanwhile, core inflation fell to 2.6% in February from the previous month’s 2.7%.
Lastly, harmonized consumer prices increased 0.43% from the previous month in February, swinging from January’s 0.28% drop. February’s result was the highest reading since April 2024.
Outlook: Our Consensus is for inflation to ease further in the coming months, though it is expected to remain marginally above the ECB 2.0% target through end-2025.
Panelist insight: ING’s Bert Colijn commented:
“Over the course of the year, we expect the eurozone to slowly move away from stagnation as domestic demand strengthens a bit on the back of further purchasing power improvements and lower rates. That should make for an environment in which inflation remains somewhat above 2%. But then again, geopolitical developments are making the inflation outlook highly uncertain at the moment. Think, for example, of uncertainty surrounding a trade war and energy prices.”