Inflation in the euro zone eased in the last two months of 2022 but the economic indicator is still well-above the 2% mandate of the European Central Bank.
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Inflation in the euro zone dropped for a third consecutive month in January on the back of a significant fall in energy costs.
Headline inflation in the euro zone came in at 8.5% in January, according to preliminary data released Wednesday. In December, the rate was recorded at 9.2%.
Energy remained the biggest cost driver in January, but once more softened from previous levels. Energy charges fell to an estimated 17.2% in January, down from 25.5% in December. However, food costs rose slightly from 13.8% in December to 14.1% in January.
The 20-member region has gone through substantial price increases in 2022, after Russia’s invasion of Ukraine pushed up energy and food costs across the bloc. However, the latest data provides further evidence that inflation has started to ease.
The economic indicator is being closely watched ahead of a new rate decision due out on Thursday from the European Central Bank. Higher inflation has led the ECB to raise rates four times in 2022, and market expectations point to at least two other increases in the coming meetings.
“A 50 basis point hike in February seems like a done deal, with the Council discussion to centre on the size of rate hikes in March and beyond,” analysts at Morgan Stanley said in a note last week.
This is a breaking news story and it is being updated.
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