Germany's annual inflation rate eased in February, hitting a two-year low to show a slowdown in the rise of consumer prices. Portugal's encouraging figures confirmed it was on a similar trajectory, as is the Netherlands.
ADVERTISEMENTInflation in Germany continued to cool, hitting an annual rate of 2.5% in February, down from 2.9% in January and 3.7% the month before.
The German Federal Statistical Office confirmed the provisional figures on Tuesday, making it the lowest rate at which prices in Germany have risen since June 2021, when inflation stood at 2.4%.
"The price situation for energy products continues to ease," said Ruth Brand, president of the Federal Statistical Office. "The increase in food prices has slowed markedly and is now below the overall inflation rate for the first time in more than two years."
The drop in energy prices has played a significant part in February's inflation rate figures, with energy costing on average 2.4% less last month than it did at the same time last year.
The trend is even stronger for household energy prices, which cost 3.6% less in February than the same time last year - that was despite the introduction of a higher carbon price at the beginning of this year.
Food prices, on the other hand, went up last month, particularly for bread, cereal and most of all oils, with olive oil prices registering a steep hike of 50.8% compared with February 2023.
Nonetheless, the decreased prices of other commonly consumed foods such as dairy products (-5.1%) and fresh vegetables (-10.6%) allowed food prices to not weigh too negatively on February's overall consumer price index (CPI).
Germany's inflation rate is now back to its mid-2021 level, prompting optimism as to the worst of the cost of living crisis being over. CPI was at its peak in the final months of 2022 when it hit 8.8%.
The country's cooling inflation echoes a similar trend in some of its European neighbours. Despite this glimmer of optimism, the European Central Bank decided to remain cautious earlier this month, keeping its benchmark interest rates on hold at 4.5% and matching market expectations.
Portugal inflation rate slightly decreases in February
Portugal's National Statistics Institute on Tuesday confirmed a slow decrease compared with the previous month, with inflation registering at 2.07% in February year-on-year.
While it only represents a timid drop from January's 2.3% rate, the first month of the year had registered a 0.9% increase compared with December 2023, mostly explained by the end of VAT exemptions applied to several food categories, as well as an increase of energy prices.
But the country's overall trajectory points towards encouraging results, with a significant plunge from October 2022's 10.1% inflation rate, at the peak of the cost of living crisis that hit all of Europe.
Energy prices remain the main component of Portuguese inflation, with a rate of 4,27% in this category for the month of February.
The Netherlands on the same path
The Dutch governmental statistics office CBS confirmed its previsions on Tuesday, with inflation dropping to reach 2.8% in February, compared with 3.2% in January.
Food as well as goods and services connected with the leisure and tourism industries were the categories that most participated in last month's inflation rate's decline.
Conversely, prices for housing and energy, as well as transportation were more expensive compared with both last month and year-on-year. Fuels were 8.6% more expensive relative to the same month last year. In January, prices were 4.3% percent higher year-on-year.
As for Portugal, Germany and the rest of Europe, Dutch figures point to an optimistic outlook after two years of rampant inflation.
The past few months' inflation figures for the Netherlands have even been low compared with its neighbours, and the recession-hit country even registered deflation in October 2023, when its inflation rate fell at -0.3%. An impressive fall considering the same rate peaked at 14.5% in September 2022.
