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Markets

Eurozone inflation steady as energy prices recover

  • Europe's spending stimulus has been less ambitious, but markets have signalled expectations that inflation will rise in the coming months, with borrowing prices for EU governments increasing.
Updated 02 Mar 2021

BRUSSELS: The rise in eurozone consumer prices steadied in February, official data showed on Tuesday, as the slump in energy prices sharply slowed despite the enduring pandemic.

The Eurostat agency said inflation in the 19 countries that use the euro ran at 0.9 percent last month, the same as in January.

January's rate marked a big leap after several months of negative inflation due to the slumping consumer demand caused by the coronavirus and restrictions to the economy across Europe.

The rise in prices in 2021 has stoked talk that the European Central Bank should consider reining in its massive stimulus programme, even if inflation remains below the ECB's near two percent target.

A global debate over the resurgence of inflation has heated up as the US sets out to rollout a $1.9 trillion stimulus plan to reboot the economy.

Europe's spending stimulus has been less ambitious, but markets have signalled expectations that inflation will rise in the coming months, with borrowing prices for EU governments increasing.

Eurostat said that energy prices fell by 1.7 percent in February compared to a year ago, instead of the negative 4.2 percent seen in January and the even deeper drops seen last year.

Those arguing for the ECB to keep helping the economy will point to core inflation, which strips out volatile components like energy and food.

Eurostat said core inflation fell in February to 1.1 percent, from 1.4 percent in January, indicating that the European economy has yet to enter a high gear.