Euro zone inflation recorded a marginal decline, coming in at 2.4% in February, slightly above the anticipated 2.3% by economists surveyed by Reuters. This reading, reported by Eurostat, highlights a subtle yet notable shift in the inflation trajectory amidst previous acceleration observed in the fourth quarter. Despite the modest dip, European Central Bank (ECB) policymakers remain optimistic about managing inflation.
The core inflation rate, which excludes volatile items such as energy, food, alcohol, and tobacco, registered at 2.6% in February. This marked a decrease from January's figures, offering a glimmer of easing price pressures. Notably, the services inflation reading also eased to 3.7% during the same period. Meanwhile, energy prices saw a sharp slowdown, increasing by merely 0.2%.
Across the euro zone, inflation trends varied. Germany's inflation rate remained steady at 2.8%, while France experienced a significant ease to 0.9% in February. These differences reflect diverse economic conditions and responses within the euro zone's largest economies.
The ECB is set to convene later this week to deliberate on interest rates. Market expectations strongly suggest another interest rate cut, which would be the sixth reduction since June. This anticipated move underscores the ECB's continued efforts to stimulate economic growth and control inflation.