Eurozone Inflation Slows To 2.4%

(RTTNews) - Eurozone inflation eased slightly in February partly reflecting the slowdown in services inflation but the rate remained above the 2 percent target, flash data from Eurostat showed on Monday.

The harmonized index of consumer prices logged an annual growth of 2.4 percent after rising 2.5 percent in January. The rate was expected to ease to 2.3 percent.

Likewise, core inflation that excludes prices of energy, food, alcohol and tobacco, slowed marginally to 2.6 percent from 2.7 percent in the previous month. This was also slightly above forecast of 2.5 percent.

On a monthly basis, the HICP gained 0.5 percent in February.

Among the components of HICP, services cost showed the highest annual increase of 3.7 percent, but this was slower than the 3.9 percent increase in January.

The annual growth in prices of food, alcohol & tobacco accelerated to 2.7 percent from 2.3 percent. Non-energy industrial goods prices gained 0.6 percent compared with 0.5 percent increase in January.

Meanwhile, energy prices moved up only 0.2 percent, slower than the 1.9 percent rise in January.

Capital Economics economist Jack Allen-Reynolds said headline inflation will remain close to its current level for the next few quarters as energy inflation edges up and food inflation stays above 2 percent.

ING economist Bert Colijn said today's soft inflation reading will contribute to views that inflation is now fairly benign, but will not provide firm evidence on how low rates should be set.

The economist expects another 25 basis point cut later this week to be accompanied by a fierce debate on when the ECB will reach its terminal rate.