Europe’s inflation rate declined to an annualized rate of 2.4% in February but came in slightly above the expectations of economists.
According to data from statistics agency Eurostat, core inflation, which takes out energy, food, alcohol and tobacco costs, declined to 2.6% in February from 2.7% the previous month.
Services inflation, which has proven sticky in recent months, also decreased, coming in at 3.7% on a year-over-year basis, down from 3.9% in January.
The main reason for the February decline in inflation was energy prices, which rose only 0.2% during the month compared to a 1.9% increase in January.
Data showed that February inflation was unchanged at 2.8% in Germany, but eased to 0.9% in France, Europe’s two largest economies.
While the inflation trend was positive, economists had expected overall inflation to come in at 2.3% in February, down from 2.5% recorded in January of this year.
While energy prices decreased sharply across Europe in February, food inflation remains sticky on the continent and above the 2% targeted by the European Central Bank (ECB).
Repeated threats from U.S. President Donald Trump to impose tariffs on goods imported from Europe has left investors and economists unsure about the outlook for consumer prices.
However, at its January meeting, the European Central Bank indicated that policymakers believe inflation is on its way to meeting its 2% target, a situation that paves the way for further interest rate reductions.
The central bank meets later this week and is widely expected to announce another interest rate cut, which would mark its sixth reduction since it started easing monetary policy last summer.
Markets are currently pricing in another 25-basis point cut from Europe’s central bank this week.
