Eurozone Annual Inflation Falls to 8.5% in Jan as Energy Prices Continue to Decline

Preliminary data released on Wednesday showed that inflation in the Eurozone dropped to 8.5% in January due to sustained decline in energy prices.

After Russia’s invasion of Ukraine pushed up energy and food prices across the bloc, the 20-member region saw significant price spikes in 2022. However, inflation began to moderate in late 2022, with headline levels falling for two months in a row. In December, the inflation rate stood at 9.2%.

The European Central Bank (ECB) has already raised interest rates four times in 2022 in response to higher inflation, and futures markets predict at least two more hikes in the upcoming meetings.

“A 50 basis point hike in February seems like a done deal, with the Council discussion to centre on the size of rate hikes in March and beyond,” analysts at Morgan Stanley said in a note last week.