Eurozone inflation edges lower in January

(Sharecast News) - Eurozone inflation edged lower last month, official data showed on Thursday, as widely expected. According to Eurostat, the European Union's statistics office, annual inflation was 2.8% in January, down from December's 2.9%. That was in line with both the first estimate and consensus.

Inflation was 8.6% a year previously.

Across the wider bloc, inflation fell to 3.1% in January from 3.4% a month earlier.

Core inflation, which strips out the more volatile elements of energy, food, alcohol and tobacco, eased to 3.3% from 3.4%, also in line with consensus.

Among individual member states, inflation fell to 3.1% in Germany, the bloc's biggest economy, from 3.8% at the end of 2024.

In France it was sharply lower, falling to 3.4% from 4.1%. In contrast, in Italy it rose to 0.9% and to 3.5% in Spain.

Claus Vistesen, chief Eurozone economist at Pantheon Macroeconomics, said: "Inflation in the Eurozone was virtually unchanged at the start of the year, halting the otherwise accelerated fall towards the end of 2023.

"We see core inflation climbing by 0.1 percentage point in March to 2.9%, before plunging 2.2% in April and rebounding slightingly in May to 2.3%.

"These forecast changes do not affect our view that the European Central Bank will cut rates in April, a call that is ultimately contingent on inflation falling as we expect in February and a clear dovish shift in the ECB's communication around what we think will be a substantially lower inflation forecast in March."