A person emptying the contents of a purse into their hand in Helsinki on 21 January 2025. Eurostat has released preliminary data indicating that inflation in the eurozone accelerated for the fourth consecutive month in January 2025, with prices rising by 2.5 per cent. (Markku Ulander – Lehtikuva)
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INFLATION in the eurozone gained pace in January, according to preliminary data released by Eurostat on Monday.
The data indicate that consumer prices in the monetary union rose by 2.5 per cent compared with the previous year, signalling an increase of 0.1 percentage points from the rate in December. Inflation has thereby picked up already for four consecutive month, having stood at 1.7 per cent in October and 2.0 per cent in November.
In January, Ireland and Finland registered the lowest year-on-year increases in consumer prices, of 1.5 and 1.6 per cent, respectively. Prices increased by 2.9 per cent in Spain, 2.8 per cent in Germany, 1.8 per cent in France and 1.7 per cent in Italy.
Services were the main driver of price growth in the eurozone, their prices surging by 3.9 per cent mostly as a result of relatively robust wage growth in the area. The prices of energy, by contrast, went up by 1.8 per cent, those of unprocessed foods by 1.4 per cent and those of industrial products by 0.5 per cent.
“Service inflation, driven by major pay increases, is the central concern, it having stayed at around four per cent for over a year,” Jari Hänninen, an economist at OP Financial Group, said according to Helsingin Sanomat.
“In spite of this, we are convinced that the central bank will continue slashing interest rates because price pressures have eased in all other main price groups.”
The European Central Bank is aiming to keep inflation at two per cent in the medium term, as part of its central price stability objective. While the monetary authority provided no indications of future cuts last week, financial markets are expecting them to continue during the course of this spring.
“Service prices have increased rapidly for already a while, but regardless inflation on the whole has abated steadily – even though energy prices rose unexpectedly in January,” remarked Päivi Puonti, the director of forecasting at Etla Economic Research.
“The big picture supports the view that the ECB will continue to cut rates.”
In the eurozone, baseline inflation has contrastively stayed at 2.7 per cent since September 2024, reveal the data from Eurostat. As baseline inflation excludes highly volatile items such as food and energy, it is considered a more reliable gauge of the breadth of consumer price increases.
Aleksi Teivainen – HT
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Source: www.helsinkitimes.fi
