Euro zone inflation cools to 1.7% in January
Illustration of food items placed on the belt of a cash register at a Leclerc supermarket in Valence, France, April 4, 2025.
Nicolas Guyonnet | Afp | Getty Images
Flash data from the statistical agency shows Eurozone inflation fell to 1.7% in January Eurostat showed Wednesday.
Economists polled by Reuters had expected the inflation rate to fall to 1.7% from 2% in December.
Core inflation, which excludes more volatile energy, food, alcohol and tobacco prices, was 2.2% in January; This was down slightly on the year from the 2.3% level seen in December.
Latest data shows that the headline inflation rate has now fallen below the European Central Bank’s 2% target; This means the central bank will stay away from further interest rate cuts for the foreseeable future.
The central bank is expected to meet next Thursday and keep the benchmark interest rate at 2%. Economists do not expect a change in the coming months, but point out that there are several factors that may change the ECB’s stance.
These could include rising geopolitical tensions, a sharp appreciation of the euro or slightly higher than expected inflation indicators, said Lorenzo Codogno, founder and chief economist of Lorenzo Codogno Macro Advisors.
“The ECB remains in a ‘good spot’ or ‘good place,’ but ECB speakers may become more reluctant to use such phrases in an environment of global uncertainty and fragility,” he said in emailed comments on Tuesday.
“I continue to see a small downside risk in policy rates in the near term and some upside risk in the medium term. But the basic scenario is the same: no change in 2026 and 2027, the bar for action is high.”
