Inflation trends in the euro area and major EU economies
The euro area recorded a February inflation rate of 2.6 percent on a year‑over‑year basis, two tenths lower than the 2.8 percent rise seen in January 2024. Across the European Union, the rate eased to 2.8 percent from 3.1 percent. These figures come from Eurostat, the European statistical office, and they reflect ongoing shifts in energy costs, food prices, and service charges across member states.
In February 2024 the drop in energy prices continues to influence the overall inflation path for the euro area. Energy costs fell by 3.7 percent year over year from a 6.1 percent drop in January, while fresh food prices rose by 2.1 percent, a much more modest increase than the 6.9 percent surge observed in January. These movements highlight how energy and food components drive the headline rate, with the energy decline tempering the broader price pressure while food costs remain a source of upward pressure in the short term.
The annual rise in the cost of services held steady at 4.0 percent, whereas the price increase for non-energy industrial goods moderated to 1.6 percent, down four tenths from January. When energy is excluded, the euro zone inflation rate stands at 3.3 percent, compared with 3.8 percent in January, underscoring the substantial impact of energy on the downstream price dynamics. Excluding food, alcohol, and tobacco also lowers the rate to 3.1 percent, its lowest reading since March 2022, signaling a cooling core inflation in the recent months.
Among the twenty seven member states, the lowest annual inflation rates in February were observed in Latvia and Denmark at 0.6 percent and in Italy at 0.8 percent. Conversely, the highest rates were seen in Romania at 7.1 percent, followed by Croatia at 4.8 percent and Estonia at 4.4 percent, illustrating a varied inflation landscape across the bloc.
Spain’s inflation sits at 2.9 percent
The harmonized inflation rate for Spain reached 2.9 percent in February, down from 3.5 percent in January. This narrowing reduces the price gap relative to the euro area average by three tenths, bringing the Spanish rate a bit closer to the EU mean. In the larger euro area economies, February inflation stood at 2.7 percent in Germany and 3.2 percent in France, both lower than their January increases of 3.1 percent and 3.4 percent, respectively. Italy reported a 0.8 percent rise in prices in February after a 0.9 percent year‑over‑year increase in January.
Eurostat notes that in its latest forecast, the European Central Bank projects inflation to ease further in 2024 and 2025, largely due to a diminished contribution from energy prices. The institutions now anticipate an average rate of about 2.3 percent for the current year and a gradual decline toward 2 percent in 2025, with projections extending to 1.9 percent in 2026. These projections reflect policy expectations and energy cost trajectories, impacting consumer prices across the region. When energy and food costs are excluded, the underlying inflation path would be around 2.6 percent in 2024, 2.1 percent in 2025, and 2.0 percent in 2026.
Overall, the inflation picture in the euro area remains mixed. Some member states experience very low inflation or even deflation in certain categories, while others grapple with elevated price pressures driven by local conditions and structural factors. The ECB continues to monitor energy price developments, supply chain dynamics, and domestic demand to calibrate its monetary policy stance in the months ahead. These considerations will shape the pace at which inflation converges toward the bank’s 2 percent target across the region, influencing borrowing costs, investment decisions, and household purchasing power.
In summary, February 2024 shows a cooling trend in headline inflation for the euro area, supported by lower energy costs and a softer pace for non‑energy goods. Core inflation remains a key focus for policymakers, with the ECB aiming to anchor expectations while gradual energy price normalization supports a gradual return to target levels in the coming years. The variation across member states also underscores the need for targeted measures addressing country‑specific price pressures and resilient domestic demand.
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