Eurostat confirms inflation at 1.9 per cent in February; eyes on the ECB

Brussels – In February, inflation in the eurozone rose by 0.2 percentage points to 1.9 per cent. Eurostat confirms the preliminary estimates released earlier this month, albeit with minor revisions compared to the forecast. Compared with January, the rise in food prices is more modest (+2.5 per cent instead of the preliminary +2.6 per cent), and the decline in the energy category is also slightly smaller (-3.1 per cent instead of -3.2 per cent). The figure for services, however, remains stable (+3.4 per cent). 

At the Member State level, the inflation rate in Italy rose by half a percentage point (from 1 per cent in January to 1.5 per cent in February), while it increased even further in France (from 0.4 per cent to 1.1 per cent). There was a slight increase in Spain (+0.1 percentage points, to 2.5 per cent), while in Germany it dipped 0.1 percentage points, to 2.0 per cent. 

The final data comes at a crucial moment for the decisions the European Central Bank is set to take. Tomorrow (19 March), the Governing Council will meet to discuss monetary policy, and all eyes will be on the board to see whether interest rates will be changed. A decision to wait and see is likely, and therefore, the option of leaving everything unchanged. Eurostat data show a mixed picture, but nevertheless an average level close to the ECB’s target of 2 per cent, and, therefore, a potential tightening could be postponed until the meeting on 29 April. 

The Frankfurt-based institution makes no secret of its concerns regarding the repercussions of the current conflict in Iran, although the extent to which this affects growth and inflation depends heavily on its duration and the evolution of a situation that is difficult to predict. A potential resumption of maritime traffic through the Strait of Hormuz could ease price pressures and influence the ECB’s policy stance.