The European Central Bank (ECB) reported that inflation in the euro zone unexpectedly rose to 2.5% in January, exceeding forecasts of 2.4%. The surge was driven by a sharp acceleration in energy costs, which jumped 1.8% from a year earlier.
According to Eurostat data, core inflation – which excludes food, energy, alcohol, and tobacco prices – remained unchanged at 2.7%, while services inflation eased slightly to 3.9% from 4% in December.
Economists had expected the January inflation print to be flat, but instead, both energy prices and core inflation exceeded expectations. The dip in services inflation was smaller than anticipated.
The ECB had previously stated that disinflation “is well on track,” with inflation expected to return to its 2% medium-term target by mid-year. However, some economists, such as Jack Allen-Reynolds at Capital Economics, noted that the latest data may not significantly impact the bank’s interest rate decisions.
Reynolds estimated that inflation is likely to reach close to the 2% ECB target by summer and could even fall lower later in the year. He also suggested that the net effect of potential tariffs imposed on goods imported to the US from the EU would be small.
However, other economists, such as Bert Colijn at ING, expressed more caution about the impact of such tariffs, warning that they could add to inflation again and increase uncertainty.
Source: https://www.cnbc.com/2025/02/03/euro-zone-inflation-january-2025.html