€-Inflation details – No free pass for the ECB

Euro area consumer prices excluding energy, food, alcohol and tobacco rose by a seasonally adjusted 0.26% in February compared to January.

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Dr Vincent Stamer

Commerzbank Economic Research

03/19/2025

The annualized rate was therefore above the ECB's target. The rise in the core rate is not due to special effects, but to higher goods prices. The core inflation rate adjusted for these special effects is therefore at 0.23% – only slightly below the rate published by the ECB. Nevertheless, we expect the ECB to cut interest rates further.

Inflation details confirm core rate above ECB target

According to the final figures from Eurostat and the ECB, consumer prices in the euro area excluding energy, food, alcohol and tobacco (core rate) rose by a seasonally adjusted 0.26% in February compared to January. This means that the core rate is higher than in previous months and is no longer compatible with the ECB's target of a 2% year-on-year rate. This does hardly change even if we adjust the official core rate for special effects based on the inflation details. While our preferred method of seasonal adjustment points to a lower core rate, the correction for volatile services this month is positive. We discuss the details in the following sections.

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