Inflation in the euro area accelerated to 2.5% y/y in January

Inflation in the euro area in January 2025 increased by 2.5% compared to the same month in 2024. Thus, the indicator accelerated the growth rate compared to December, when it amounted to +2.4% y/y. This is evidenced by preliminary data from Eurostat.

The consensus forecast of analysts, cited by Trading Economics, assumed that the rate of price growth would remain at the December level.

In January, core inflation, which excludes energy and food costs, remained at the level of December – 2.7%. Energy prices increased by 1.8% after rising by 0.1% in December.

During the month, the member states with the highest annual inflation rates were Croatia (5%), Belgium (4.4%), and Slovakia (4.1%). The lowest rates were recorded in Ireland (1.5%), Finland (1.6%), Italy and Malta (1.5% each). In Germany, consumer prices rose by 2.8%, and in France – by 1.8%.

The European Central Bank continues to pursue its monetary stimulus policy. On January 30, 2025, the ECB cut all three key interest rates by 25 basis points (bps). Starting from February 5, the deposit rate will be 2.75%, the main refinancing rate will be 2.9%, and the margin loan rate will be 3.15%. Last year, the bank cut interest rates four times.

According to Eurostat’s preliminary estimates, the EU’s GDP grew by 0.8% in 2024 compared to 2023. In the euro area, this figure increased by 0.7% y/y.

In the fourth quarter of 2024, seasonally adjusted EU GDP grew by 0.1% compared to the previous quarter, and by 1.1% compared to the same period in 2023. In the euro area, the indicator remained at the level of the third quarter and grew by 0.9% y/y.

At the end of last year, the European Central Bank (ECB) downgraded its forecast for eurozone GDP growth in 2024 to 0.7% from 0.8%. Economic growth expectations for 2025 were revised to 1.1% from 1.3%, and for 2026 to 1.4% from 1.5%.