Inflation Rate Decline

Euro area inflation eased to 2.6% in February 2024, down from 2.8% in January, according to a flash estimate from Eurostat. This marks a significant decline from the peak of 10.6% in October 2022. The main components contributing to this decline are food, alcohol & tobacco, which saw a decrease in annual rate from 5.6% in January to 4.0% in February. Services inflation also dipped slightly to 3.9%, with non-energy industrial goods at 1.6%. Notably, energy prices continued their downward trend, recording a -3.7% change.

Core Inflation Surpasses Expectations

Contrasting the overall decline, core inflation, which excludes volatile components like energy, food, alcohol, and tobacco, stood at 3.1%, exceeding the anticipated 2.9%. This figure remains significantly above the European Central Bank’s (ECB) target rate of 2%, indicating persistent underlying inflationary pressures.