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Eurozone inflation eased to 2.6 per cent in February, however the determine was larger than anticipated by economists as shopper costs excluding vitality and meals continued to rise at persistently robust charges.
The annual enhance of shopper costs within the 20 international locations that share the euro slowed from 2.8 per cent in January, in accordance with data released by the EU statistics workplace on Friday. The speed was barely larger than the two.5 per cent fee forecast by economists in a Reuters ballot.
The continued decline in the price of residing for European shoppers will probably be welcomed by the European Central Bank, which meets subsequent week to debate how quickly to chop rates of interest amid indicators the financial system stays mired in stagnation.
Nonetheless, many rate-setters are more likely to fear that fast wage progress continues to be pushing up costs within the labour-intensive providers sector, the place inflation slowed solely barely to three.9 per cent within the 12 months to February, from 4 per cent a month earlier.
Core inflation, which strips out vitality and meals costs to provide a greater image of underlying value pressures, fell extra slowly than economists anticipated from 3.3 per cent in January to three.1 per cent in February.
For the reason that disruption of the coronavirus pandemic and Russia’s invasion of Ukraine triggered the most important value surge for a technology, eurozone inflation has fallen quickly from its peak of 10.6 per cent in October 2022. This has raised hopes that the ECB may quickly begin to decrease borrowing prices after they raised their benchmark fee to a document 4 per cent final 12 months.
Senior ECB policymakers have performed down the probability of imminent cuts. Some have signalled they’re unlikely to loosen financial coverage earlier than June to provide them time to verify if wage pressures are moderating sufficient to permit inflation to succeed in their 2 per cent goal.
The central financial institution plans to launch new forecasts after its assembly subsequent week. Goldman Sachs expects it to chop its forecast for eurozone inflation this 12 months from 2.7 per cent to 2.3 per cent and for subsequent 12 months from 2.1 per cent to 2 per cent.