On February 2, 2024, in Catania, Italy, a salesman was preparing a bag of candies for customers in the Sicilian confectionery store Mazzone.
Villa Fabrizio | Getty Images News | Getty Images
Preliminary data released on Friday showed that the inflation rate in the 20 euro zone countries fell back to 2.6% in February, but the overall data and core data were higher than expected.
Economists polled by Reuters forecast overall growth of 2.5%.
After excluding volatile components such as energy, food, alcohol and tobacco, core inflation was 3.1%, higher than the 2.9% expected.
The EU statistics agency said food, alcohol and tobacco had the highest inflation rate in February at 4%, followed by services at 3.9%.
Energy prices, which rose last year as a result of Russia’s invasion of Ukraine, continued to fall, with deflation falling from -6.1% to -3.7%.
The key figure for January was 2.8%, with further easing expected after price rises cooled in Germany, France and Spain.
Investors are looking for clues on when the European Central Bank will start cutting interest rates, with markets pricing in a rate cut in June. However, many ECB officials still stressed that they need to complete spring wage negotiations to get a clearer picture of domestic inflationary pressures.
February’s data will be mixed for policymakers, as core inflation remains above 3% even as headline interest rates are moving toward the ECB’s 2% target. Still, price gains have slowed sharply from a peak of 10.6% in October 2022.
The ECB also must deal with the euro zone’s post-Brexit economic stagnation narrowly avoided a recession Gross domestic product growth was flat in the fourth quarter of last year.
European stock market gains slowed after the release of inflation data, rising 0.2% from 0.5% earlier in the morning. The euro was flat against the dollar and sterling.
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