Euro Area: Inflation ticks down in February
Harmonized inflation declined again in February, albeit less than expected by markets, falling to 8.5% from January’s 8.6% reading. It therefore moved somewhat closer to the European Central Bank’s target rate of 2.0%.
February’s result was due to a slower increase in the prices for energy. That said, prices for services, food, alcohol and tobacco and non-energy industrial goods rose at a faster pace. Meanwhile, the annual rate of core inflation, which excludes volatile energy and unprocessed foods prices, rose to 7.4% in February from January’s 7.1%—marking the highest print since records began.
On a monthly basis, harmonized consumer prices jumped 0.8% in February, contrasting January’s 0.2% dip.
Commenting on the outlook, Bert Colijn, senior economist at ING, stated:
“The February reading is a clear setback, but forward-looking indicators show that the declining trend in inflation is set to continue. March will show a much faster drop in headline inflation as the huge jump from last March will fall out of the year-on-year comparison. Energy inflation is set to turn negative soon, possibly already in March. But the question is how fast other price categories will see declines and if inflation proves to be stickier than expected.”