Eurozone’s inflation slowed down in February, but is still higher than expected due to rising food and service prices.
Headline inflation for the 20 nations across the eurozone last month came in at 8.5%, a slowdown from 8.6% in January, but higher than the 8.2% rise forecast from economists polled by Reuters. Nearly all drop came from lower energy costs, coming down from its peak last year. However, prices for most other items such as food, services and durable goods continued to surge in February.
Meanwhile, core inflation, which excludes the volatile food and energy prices, rose from 5.3% to 5.6%.
Across the bloc, inflation in France and Spain shot up unexpectedly.
Immediately after the announcement, JPMorgan raised its forecast for the European Central Bank’s terminal rate to 3.75% by June from a forecast of 3.50% earlier. The investment bank expected the ECB to raise rates by 50 basis points in May from a 25bps in earlier estimates.
