Inflation declines in the EU due to falling energy prices

Inflation in the European Union fell back to 2.6% in February, as high interest rates, moderate oil and gas prices, and slow economic growth kept prices in stores from rising.

This was reported by the European Union’s statistical agency, Eurostat.

Food inflation dropped to 4% from 5.6%, which brought some relief to people with modest incomes who spend more of their salaries on basic necessities than wealthy people. A 3.7% decline in energy prices was another factor.

Inflation is now well below its peak of 10.6% in October 2022, which it reached after Russia cut off most of its natural gas supplies and significantly raised energy prices.

The February figure for the 20 countries that use the euro currency is comparable to the January figure of 2.8%.

One of the key signs that inflation is slowing down is so-called core inflation, which excludes fluctuations in food and fuel prices.

The ECB closely monitors this indicator as a measure of underlying inflationary pressures in the economy, and it decreased to 3.1% from 3.3%, marking the lowest level since March 2022.

The decline in the inflation rate brings the ECB closer to achieving its target of 2% inflation, which is considered the best indicator for the economy. It raised interest rates, including the key policy rate, to a record high of 4% in September.

Earlier, it was reported that the UK economy fell into recession in the second half of 2023, ahead of the parliamentary elections expected this year.

Before that, it became known that Germany’s economy became the third largest on the planet after Japan unexpectedly slipped into recession.

In the last quarter of last year, the eurozone economy stagnated again, continuing a disappointing trend for the EU, which is suffering from war, inflation, and weakening export markets but has avoided recession.