Eurozone Inflation Falls to 2.6% in February

The inflation rate in the eurozone is expected to be 2.6% in February 2024, as per the latest Eurostat flash estimate. This is the annual rate of change, and thus indicates how much prices have changed compared to February 2023.

A rate of 2.6% indicates a slight decrease from the 2.8% observed in January 2024 and also represents a continuation of the decline in inflation that started in late autumn of 2022. At it’s peak, eurozone inflation stood at 10.6% in October 2022.

The eurozone consists of those EU Member States that have adopted the euro as their currency: Belgium, Germany, Estonia, Ireland, Greece, Spain, France, Croatia, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Austria, Portugal, Slovenia, Slovakia and Finland.

For these countries, it is the European Central Bank (ECB) that defines the monetary policy. The ECBs main objective is to maintain price stability, and its primary tool to doing to is through its set of interest rates at which commercial banks can borrow from or deposit with the ECB. Every six weeks the ECB takes monetary policy decisions aimed at steering inflation towards a 2% target rate.

In their latest Monetary Policy decisions on the 25 January 2024, the ECB decided to keep interest rates unchanged, based on their overall assessment that their past interest rate hikes are helping to push inflation down.

The February 2024 flash estimate shows Croatia and Estonia with the highest rates at 4.8% and 4.4%, respectively, while Latvia and Italy records the lowest at 0.7% and 0.9%. Almost all eurozone countries have seen inflation rates decline significantly over the past months. Overall, from January to February 2024 the average annual inflation rate decreased in 11 countries, was stable in 5 and increased in 4, per the Eurostat flash estimate.

The chart below shows how the inflation rate has developed over the past five years in all eurozone countries. These are harmonised indices of consumer prices (HICP), which means the measure is comparable across countries.

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