Eurozone inflation falls for third straight month

BRUSSELS: The eurozone annual inflation rate fell for a third consecutive month to reach 8.5 percent in January, beating expectations, the EU’s statistics agency said Wednesday.

Consumer prices dropped from the 9.2-percent rate recorded in December, helped by a continued slowdown in the rate of energy cost rises.

The figure was much lower than the forecast of nine percent by financial data firm FactSet.

Although inflation in the single currency area is slowing, the European Central Bank (ECB) is expected to raise interest rates on Thursday with a 50-basis-point hike.

Inflation had peaked at 10.6 percent in October last year, five times higher than the ECB’s target.

“It is vital that inflation rates above the ECB’s two-percent target do not become entrenched in the economy,” ECB President Christine Lagarde said last month.

Eurostat data showed energy costs increased by 17.2 percent in January compared to 25.5 percent a month earlier.

Food and drink costs recorded a greater rise of 14.1 percent last month compared to 13.8 percent in December.

Among the 20 countries that use the euro, Luxembourg and Spain had the lowest inflation rate, both reaching 5.8 percent in January, Eurostat said.

A flurry of better-than-expected data in the past weeks have raised hopes that the European economy is more resilient after the economic shocks from the war in Ukraine.

The eurozone is set to avoid recession this winter after recording weak-but-positive growth of 0.1 percent in the fourth quarter of 2022, data showed Tuesday.

According to Eurostat data published Wednesday, the unemployment rate in the eurozone remained stable in December at 6.6 percent.