Eurozone Inflation Rises to 2.5% in January

Inflation in the euro area rose slightly to 2.5% in January 2025, up from 2.4% in December 2024, according to Eurostat, the statistical office of the European Union.

This marks a decline from the 2.8% inflation rate recorded in January 2024, indicating a continued slowdown in price growth. Meanwhile, the European Union’s overall inflation rate stood at 2.8%, rising from 2.7% the previous month but down from 3.1% a year earlier.

Core Inflation Holds at 2.7%

The core Consumer Price Index (CPI), which excludes volatile food and energy prices, remained unchanged at 2.7% in January, aligning with both market forecasts and the previous month's reading.

Inflation Trends Across EU Member States

Inflation levels varied significantly across EU member states, with Denmark recording the lowest rate at 1.4%, followed by Ireland, Italy, and Finland, each at 1.7%. On the higher end, Hungary saw the steepest inflation at 5.7%, while Romania (5.3%) and Croatia (5.0%) also registered elevated levels.

Compared to December 2024:

• Inflation decreased in eight EU countries,
• Remained unchanged in four, and
• Increased in fifteen.

Key Drivers of Inflation

Breaking down inflation by sector:

• Services contributed the most to price growth (+1.77 percentage points).
• Food, alcohol, and tobacco added +0.45 percentage points.
• Energy prices contributed +0.18 percentage points.
• Non-energy industrial goods accounted for +0.12 percentage points.

Economic Outlook

The rise in headline inflation, along with the stable core CPI, suggests persistent price pressures in the eurozone. While energy prices saw a modest increase, services inflation remains the primary driver of overall price growth. The European Central Bank (ECB) continues to monitor inflation trends closely as policymakers assess the timing of potential interest rate adjustments in 2025.

Source: Eurostat