A seller prepares a bag of sweets for a customer at the Mazzone Sicilian pastry shop in Catania, Italy, on February 2, 2024.
Fabrizio Villa | Getty Images News | Getty Images
Inflation in the 20-nation euro zone fell to 2.6% in February, flash figures showed on Friday, but both the headline and core numbers were higher than expected.
Economists polled by Reuters had forecast a total of 2.5%.
Core inflation, which excludes the volatile components of energy, food, alcohol and tobacco, was 3.1%, above the expected 2.9%.
The European Union 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 following Russia’s invasion of Ukraine, continued to fall, with the deflation rate rising to -3.7% from -6.1%.
Previously, the headline figure was 2.8% in January, with further easing expected after price increases cooled in Germany, France and Spain.
Investors are looking for clues as to when the European Central Bank will start cutting interest rates, with market prices pointing to a rate cut in June. Still, many ECB officials still stress that they need to complete wage negotiations in the spring before they have a clearer picture of domestic inflation pressures.
February’s numbers will be a mixed picture for policymakers as core inflation remains above 3% even as the key interest rate moves towards the ECB’s 2% target. Nevertheless, price increases have weakened significantly since their peak of 10.6% in October 2022.
After the blockade, the ECB also has to contend with economic stagnation in the eurozone narrowly avoided a recession last year and recorded stagnating gross domestic product growth in the fourth quarter.
European stocks’ gains moderated following inflationary pressures, trading 0.2% higher compared to 0.5% earlier in the morning. The euro remained unchanged against the US dollar and the British pound.
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2024-03-01 10:41:41
www.cnbc.com
