Euro Area: Inflation stable in February
Harmonized inflation came in at 0.9% in February, matching January’s reading—which had marked the strongest reading in close to one year. Inflation therefore remained below the European Central Bank’s target rate of near, but under, 2.0%. February’s result was due a much softer fall in prices for energy offsetting softer increases in prices for non-energy industrial goods, services and for food, alcohol and tobacco.
On a monthly basis, harmonized prices rose 0.2% in February, matching January’s increase. Core inflation, which excludes volatile energy and unprocessed foods prices, softened to 1.2% from 1.4% in January.
A complete set of data for harmonized inflation will be released on 17 March.
Commenting on the release, Bert Colijn, senior economist at ING, stated:
“With all the market jitters about an economy running hot in the US, rising eurozone inflation could give a similar impression at face value. Not much more than that though, as temporary factors are pushing up the rate right now and the economy continues to contract as the second round of lockdowns has been extended well into 1Q. This means that we expect the elevated levels of inflation in 2021 to be largely transitory and that weaker inflation is set to return in 2022.”