Euro zone inflation dips for a third straight month as energy prices continue to fall

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Inflation in the euro zone eased in the last two months of 2022 but the economic indicator is still well-above the 2% mandate of the European Central Bank.
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Inflation in the euro zone came in at 8.5% in January, according to preliminary data released Wednesday.

The 20-member region has gone through substantial price increases in 2022, after Russia’s invasion of Ukraine pushed up energy and food costs across the bloc. However, inflation started to ease in late 2022, showing two consecutive months of a reduction in headline levels. In December, the rate was recorded at 9.2%.

The economic indicator is being closely watched ahead of a new rate decision due out on Thursday from the European Central Bank. Higher inflation has led the ECB to raise rates four times in 2022, and market expectations point to at least two other increases in the coming 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.

This is a breaking news story and it is being updated.

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