EU Inflation Eases: January 2024 Rates Show Mixed Trends Across Member States
Inflation in the EU and eurozone is easing. In January, 15 EU countries reported a decrease in inflation, while 11 countries saw an increase.
Annual inflation in the EU fell to 3.1% in January 2024, down from 3.4% in December, according to Eurostat. This is significantly lower than last year’s rate of 10.0%.
The eurozone’s inflation rate also decreased to 2.8% in January 2024, down from 2.9% in December, and much lower than 8.6% in January 2023.
Price Increases Slow
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Falling inflation means that consumer prices are rising more slowly than before, though they are still increasing. For example, energy prices in the EU in January were lower than one year earlier.
Eurostat’s preliminary estimate for February indicates that eurozone inflation fell to 2.6%. However, it remains above the European Central Bank’s target of 2%.
Inflation rates vary across Europe. While inflation decreased in most EU countries, none reported negative inflation in January. February projections do not indicate any declines yet.
Inflation Trends
Inflation peaked in October 2022 at 11.5% due to rising energy prices after Russia’s invasion of Ukraine. Between 1997 and 2021, the highest inflation rate was 4.4% in July 2008. Since the peak in 2022, inflation has generally fallen, with few exceptions.
Country-Specific Data
In January 2024, Romania had the highest inflation rate at 7.3%. Estonia followed with 5%, Croatia at 4.8%, and Poland at 4.5%.
Denmark and Italy recorded the lowest inflation rates at 0.9%. Latvia, Lithuania, and Finland had rates of 1.1%.
Spain’s inflation was 3.5% and France’s was 3.4%, while Germany matched the EU average at 3.1%. The UK’s inflation rate stood at 4.2%.
Higher Inflation in Candidate Countries
Candidate countries reported higher inflation rates than the EU. Turkey had an exceptional rate of 64.9%, with independent groups estimating it as high as 129%.
Future Expectations
Eurostat’s estimates show 11 out of 20 euro area countries are expected to see declining inflation in February. Slovakia is projected to have the highest decline, dropping from 4.4% to 3.7%.
In February, Croatia recorded the highest expected inflation at 4.8%, while Latvia had the lowest at 0.9%. Food, alcohol, and tobacco inflation is anticipated to lead at 4.0%.
Energy inflation is expected to stay negative at -3.7%. Unprocessed food inflation fell from 6.9% in January to 2.2% in February, providing potential relief to low-income households.
Economic Outlook for 2024
The European Commission forecasts gradual economic growth in the EU for 2024, predicting increased consumer spending. As inflation declines, real wages are expected to improve, helping to stabilize food prices.