By Obinna Uballa
Eurozone inflation edged higher to 1.9 per cent in February, official data showed on Tuesday, bringing price growth just shy of the European Central Bank’s two per cent target.
Figures released by Eurostat indicated that the uptick from 1.7 per cent in January surpassed analysts’ expectations compiled by financial data firm FactSet.
The marginal rise across the 21-member euro area was largely driven by stronger services inflation, which accelerated to 3.4 per cent from 3.2 per cent in the previous month.
Energy prices, however, continued to decline, though at a slower pace. The fall moderated to 3.2 per cent in February from four per cent in January.
Core inflation, which excludes volatile components such as food and energy, also ticked up to 2.4 per cent, suggesting underlying price pressures remain elevated.
Despite the increase, overall inflation remains just below the ECB’s two per cent benchmark, reinforcing expectations that policymakers may hold rates steady at their next meeting.
Fresh geopolitical tensions following the outbreak of war in the Middle East over the weekend have fuelled concerns about renewed energy price spikes that could complicate the inflation outlook.
Riccardo Marcelli Fabiani, senior economist at Oxford Economics, warned that ongoing turmoil in the region could keep oil supplies disrupted into the next quarter and push up European gas prices as countries seek to replenish storage.
However, he downplayed fears of a renewed surge in prices.
“The turmoil in the Middle East will raise energy prices, as oil supply disruption should continue into next quarter and European gas prices will be pushed up due to the need to replenish storage,” Fabiani told AFP news agency.
“But the impact should not be overstated.”
He added that the risk of “runaway inflation is off the table” and suggested the ECB is unlikely to adjust interest rates at its policy meeting in two weeks’ time.
