In February 2024, inflation in the Eurozone slowed down to 2.6% on an annual basis from 2.8% in January, but slightly more than anticipated, as preliminary data from Eurostat indicates.

Every month, the Consumer Price Index (CPI) increased by 0.6% in February compared to the previous month when it decreased by 0.4%.

Core inflation (excluding food and energy prices) also continued to weaken compared to the previous year, reaching 3.1% compared to 3.3% in January, hitting its lowest level since March 2022. However, market expectations were for an even sharper slowdown in core inflation to 2.9%.

Despite the ongoing weakening of inflation in the Eurozone towards the European Central Bank’s target of 2%, the slightly more restrained than expected slowdown in price growth, especially in core inflation, seems to support the ECB’s argument to maintain its interest rates at their current record-high levels a little longer before starting to loosen its monetary policy (lowering interest rates) around the middle of the year.

The easing of inflation on an annual basis in February is due to the continued decline in energy prices (by 3.7%, but after a decrease of 6.1% in January), slower growth in prices of food, alcoholic beverages, and tobacco (by 4.0% following an increase of 5.6% the previous month), non-energy industrial goods (by 1.6% following an increase of 2.0% the previous month), as well as a slight weakening of inflation in the services sector (down to 3.0% from 4% in January).

Higher inflation in February was recorded in Croatia (4.8%), Estonia (4.4%), and Austria (4.2%), while the lowest inflation was reported in Latvia (only 0.7%), followed by Italy (0.9%), Lithuania (1.1%), and Finland (1.2%).