Eurozone Inflation Eases To 2.3%

(RTTNews) - Eurozone inflation eased more than initially estimated to a three-month low in February, as sluggish economic activity impeded inflationary pressures, official data revealed on Wednesday.

The harmonized index of consumer prices rose 2.3 percent on a yearly basis in February, slower than the 2.5 percent increase in January, final data from Eurostat showed. The February rate was revised down from 2.4 percent.

Core inflation that excludes energy, food, alcohol and tobacco, slowed marginally to 2.6 percent, in line with flash estimate, from 2.7 percent in the previous month.

On a monthly basis, the HICP gained 0.4 percent in February, which was down from the initial estimate of 0.5 percent.

Among the components of HICP, services cost showed the biggest 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, much slower than the 1.9 percent rise in January.

Earlier this month, the European Central Bank had reduced its key interest rates for the fifth policy session and signaled a pause in the easing cycle as policy is deemed less restrictive.

The deposit rate was cut by 25 basis points to 2.50 percent, which was the lowest level since February 2023.

Also, the ECB had raised its inflation forecast for this year to 2.3 percent from 2.1 percent. The projection for next year was retained at 1.9 percent and the outlook for 2027 was lowered to 2.0 percent from 2.1 percent.

Elsewhere, data from Eurostat today showed that hourly labor cost softened to 3.7 percent in the fourth quarter from 4.5 percent in the third quarter.

Within total cost, wages and salaries increased 4.1 percent and non-wage costs moved up 2.6 percent.

Year-on-year, growth in hourly labor cost was 3.3 percent but weaker than the 4.2 percent in the preceding quarter.