Eurozone inflation holds steady at 0.9%

Inflation across the eurozone remained steady in February, official data confirmed on Wednesday, supported by more expensive services.

According to Eurostat, the European Union’s statistics office, annual inflation remained unchanged at 0.9% year-on-year in February, in line with both the flash estimate and consensus. A year previously, the inflation rate was 1.2%.

Across the wider EU, headline annual inflation was 1.3%, up marginally on January’s 1.2% rise but down on February 2020's 1.6% rate.

The highest contributors were services, ahead 0.55 percentage points, followed by food, alcohol and tobacco, non-energy industrial goods, and energy.

Stripping out more volatile energy and food costs, eurozone core annual inflation was 1.1%, an easing on January’s 1.4% and in line with Eurostat’s initial estimates.

Among individual countries, the lowest annual rates were recorded in Greece, which saw a 1.9% decline, and Slovenia, down 1.1%. The highest rates were in Poland, where inflation was 3.6%, and Hungary, up 3.3%.

Germany, the eurozone’s largest economy, was unchanged on January at 1.6%, as was France, at 0.8%. Spain eased to -0.1%, however, compared to a rise of 0.4% a month previously.

Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, said: "Looking ahead, we suspect the core rate is now stabilising at around 1%, though an increase in transportation is a wild card in relation to the coming leap in fuel costs.

"The further rebound in energy inflation, to -1.7% from -4.2%, sets the stage for what could be a wild few months. At the current trend, oil prices will be rising by 95% year-over-year through March before peaking at near 250% leap in April. It’s difficult to say how exactly this will feed through to the energy component, but we see significant upside risks to Eurozone headline inflation over the next few months."