Annual inflation in the euro area fell to 2.4 per cent
Planet Volumes, Unsplash
According to preliminary data from Eurostat, annual inflation in the euro area stood at 2.4% in February 2025, down from 2.5% in January. This confirms the trend of a gradual slowdown in price growth, but the structure of inflation remains heterogeneous: the cost of services and food continues to rise, while energy prices have almost stabilised.
Let's break down the key components of inflation:
- Services are the biggest driver of inflation, with an annual growth rate of 3.7% (vs. 3.9% in January). This is due to high labour costs and demand for services in tourism, hospitality and transport.
- Food, alcohol and tobacco - price growth accelerated to 2.7 per cent (from 2.3 per cent in January), reflecting the impact of seasonal factors and ongoing supply chain challenges.
- Industrial goods (excluding energy) - moderate growth of 0.6% (vs. 0.5% a month earlier). Here, the moderating factor is the decline in global demand and the normalisation of supply chains.
- Energy - price growth has almost stopped, amounting to 0.2% in February (compared to 1.9% in January). This indicates the stabilisation of the oil market and the reduction of geopolitical risks.
In Luxembourg, annual inflation in February 2025 was 1.9 per cent, down from 2.4 per cent in January. This is one of the lowest rates among eurozone countries, due to relatively stable energy prices and a slowdown in industrial goods prices. However, the services sector continues to put pressure on the overall inflation rate.
The situation remains heterogeneous across the eurozone countries. In Germany, inflation stands at 2.8 per cent, while in France it has fallen to 0.9 per cent. In Spain, price growth remains at 2.9 per cent and in the Baltic States inflation is above 5 per cent, which remains one of the highest in the region.
A decline in inflation to 2.4% could be a reason for the European Central Bank (ECB) to ease monetary policy in the coming months, which would support economic growth. However, there are still risks associated with a possible spike in energy prices, volatile global markets and weakening consumer demand. Full data for February will be released on 19 March 2025.
