Inflation in the Eurozone experienced a decrease in February, dropping by one-tenth of a percentage point to 2.4%, according to preliminary estimates released by Eurostat, the statistical office of the European Union.

This marks a reversal of a four-month upward trend, attributed largely to reduced pressures in energy prices.

The figure is now edging closer to the European Central Bank's (ECB) target of 2%.

Additionally, underlying inflation, which excludes volatile categories such as energy, food, alcohol, and tobacco, also fell by one-tenth of a percentage point to 2.6% after five months of stagnation.

This measure is closely monitored by the ECB when evaluating monetary policy and setting interest rates.

Expectations among analysts suggest that the ECB, led by President Christine Lagarde, may implement another interest rate cut of 25 basis points during its upcoming meeting on March 6, lowering the deposit facility rate to 2.5%.

If realized, this would be the lowest rate since February 2023 and 1.5 percentage points below the peak rate.

Breaking down the main components of the Eurozone’s Harmonized Index of Consumer Prices (HICP), services have shown the most significant increase over the past year, although growth has begun to decelerate, registering 3.7% in February compared to 3.9% in December.

Food, alcohol, and tobacco prices saw an increase from 2.3% in January to 2.7% in February.

Non-energy industrial goods prices rose by 0.6%, slightly up from 0.5% in January, while energy prices saw a modest increase of 0.2%, a decline from the 1.9% rise recorded in January.

The only component witnessing an acceleration in inflation is energy, which rose 1.8% in January, up from just 0.1% in December.

Non-energy industrial goods remained steady with a 0.5% increase.

Among major Eurozone economies, Spain reported the highest inflation rate in January at 2.9%, five-tenths above the Eurozone average, followed closely by Germany at 2.8%.

Italy and France experienced considerably lower rates, at 1.7% and 0.9% respectively, with France seeing a sharp drop from 1.8% in January.

In January, member states with the highest inflation rates included Estonia at 5%, Croatia at 4.7%, Belgium at 4.4%, and Slovakia at 4%.

Conversely, countries with the lowest inflation rates included France, Ireland at 1.3%, Finland at 1.5%, and Italy.

During its last meeting on January 30, the ECB unanimously decided to cut interest rates for the fifth time since June 2024, reducing the deposit rate by 25 basis points to 2.75%.

President Lagarde indicated a continuing intention to lower rates in future meetings, asserting that the monetary policy was still in a restrictive territory and stating that it was premature to discuss when to halt further cuts.

However, in recent weeks, 'hawkish' members of the ECB have begun advocating for an end to rate cuts in the near future.

German representative Isabel Schnabel expressed concerns, stating that it is no longer clear whether monetary policy remains in restrictive territory and highlighted rising inflation risks stemming from geopolitical instability, including a potential ceasefire in Ukraine and a resurgence in energy prices.