Eurozone inflation rate confirmed at six-month high

The consumer price inflation rate in the Euro Area was confirmed at 2.5% in January 2025, marking the highest level since July 2024, primarily driven by a sharp rise in energy costs (1.9% vs. 0.1% in December).

Eurozone inflation rate confirmed at six-month high

Meanwhile, inflation for non-energy industrial goods remained stable at 0.5%, while price growth slowed for both services (3.9% vs. 4.0%) and food, alcohol, and tobacco (2.3% vs. 2.6%). The core inflation rate, which excludes volatile food and energy prices, held steady at 2.7% for the fifth straight month, its lowest level since early 2022. On a monthly basis, consumer prices declined by 0.3% in January, following a 0.4% rise in December.

Eyes on ECB moves

The persistence of core inflation suggests that underlying price pressures remain despite the overall moderation in headline inflation. Policymakers at the European Central Bank (ECB) continue to assess the inflation trajectory, with markets closely watching for any signals regarding potential rate adjustments. While some ECB officials have hinted at a possible rate cut later in the year, concerns over sticky service-sector inflation and geopolitical uncertainties could delay such moves.

What's shaping inflation

Additionally, energy price fluctuations, supply chain dynamics, and wage growth trends will play a crucial role in shaping the inflation outlook for the coming months. Investors and analysts will be monitoring upcoming economic data, including wage negotiations and business sentiment indicators, to gauge the ECB’s next steps in its monetary policy strategy.