Inflation Shows Signs of Cooling
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Loading... - Hannele Kivi
- 21 Mar 2025
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The euro area’s annual inflation rate continued its downward trend in February, dropping to 2.3%, a slight decrease from January’s rate of 2.5%, according to the latest data from Eurostat. This marks a further decline from the 2.6% recorded in the same month last year, indicating that inflationary pressures may be easing.
In Luxembourg, the annual inflation rate fell to 1.9% in February, down from 2.4% in January. This decline reflects a broader trend of decreasing inflation rates across the eurozone, suggesting improved economic stability in the region.
The broader European Union also experienced a decrease in inflation, registering a rate of 2.7% in February, down from 2.8% in January. However, this rate remained unchanged compared to the same period last year, indicating that while inflation is cooling, it is still a concern for many EU member states.
Among the euro area countries, France, Ireland, and Finland recorded the lowest annual inflation rates, with France at 0.9%, Ireland at 1.4%, and Finland at 1.5%. In contrast, Hungary, Romania, and Estonia reported the highest inflation rates, reaching 5.7%, 5.2%, and 5.1%, respectively.
A closer examination of the factors contributing to inflation reveals that services had the most significant impact, contributing 1.66 percentage points to the annual rate. Food, alcohol, and tobacco also played a notable role, contributing 0.52 percentage points. In comparison, non-energy industrial goods and energy had smaller effects, with energy contributing just 0.01 percentage points.
The recent data indicates a positive trend in the euro area and Luxembourg, with inflation rates showing signs of cooling. While this development is encouraging, ongoing monitoring of inflationary pressures and their underlying causes will be essential for policymakers as they navigate economic recovery and stability in the region.
