The final data published by Eurostat showed that consumer price growth slowed in February, retreating from a 6-month high and recording its first decline since September 2024. Meanwhile, core inflation reached its lowest level since January 2022. Overall, the latest data has eased concerns that unexpectedly strong price pressures could prevent further easing of the ECB's monetary policy. Markets now see a 50% to 60% chance of a rate cut in April but have fully priced in a move by June.
According to the report, the consumer price index rose by 2.3% per year after an increase of 2.5% per year in January. Economists and a preliminary estimate suggested a decline to 2.4%. The main reason for the weaker price growth was the revision of the figures in Germany. European Union annual inflation was 2.7% in February, down from 2.8% in January. A year earlier, the rate was 2.8%.
Meanwhile, on a monthly basis, the consumer price index rose by 0.4%, offsetting the January decline (-0.3%). Consensus estimates suggested an increase of 0.5%.
Eurostat reported that the core consumer price index - excluding energy, food, alcohol and tobacco - rose by 2.6% per year, as expected, after increasing by 2.7% per annum in January.
The data also showed that the highest contribution to the annual inflation rate came from services (+1.66%), followed by food, alcohol & tobacco (+0.52%), non-energy industrial goods (+0.14%) and energy (+0.01%).
The lowest annual rates were registered in France (0.9%), Ireland (1.4%) and Finland (1.5%). The highest annual rates were recorded in Hungary (5.7%), Romania (5.2%) and Estonia (5.1%). Compared with January 2025, annual inflation fell in fourteen Member States, remained stable in six and rose in seven.