Eurozone Inflation Slows; Jobless Rate Lowest Since 2008

Eurozone inflation slowed on falling energy prices in February and the unemployment rate held steady at the lowest level in more than a decade at the start of the year, official data showed Tuesday.

According to the flash estimate from Eurostat, inflation in the currency bloc slowed to 1.2 percent in February from 1.4 percent in January. The rate came in line with expectations.

Headline inflation remained well below the European Central Bank's target of "below, but close to 2 percent."

However, core inflation that excludes energy, food, alcohol and tobacco, edged up to 1.2 percent from 1.1 percent a month ago.

The impact of Covid-19 on the economy will distort inflation figures in the months ahead, but it is too early to tell just yet, Bert Colijn, an ING economist, said.

For the ECB, today's figures will be no more than confirmation of the current modest inflation environment, the economist said. For the March 12 meeting, immediate Covid-19 measures will be much more relevant than the February inflation environment.

Data showed that energy prices dropped 0.3 percent, reversing a 1.9 percent rise in January.

Meanwhile, annual growth in food, alcohol and tobacco prices rose to 2.2 percent from 2.1 percent. Likewise, prices of non-energy industrial goods and services grew at faster rates of 0.5 percent and 1.6 percent, respectively.

On a monthly basis, the harmonized index of consumer prices gained 0.2 percent in February. Final data is due on March 18.

Another report from Eurostat revealed that producer prices dropped at a slower pace of 0.5 percent year-on-year in January, following a 0.6 percent decline in December.

However, excluding energy, producer prices rose at a slightly faster pace of 0.6 percent annually in January.

The jobless rate remained unchanged at 7.4 percent, as expected, in January. This was the lowest since May 2008. In the same period last year, the unemployment rate was 7.8 percent.

The number of people out of work increased by 1,000 from December and declined 593,000 from last year. Unemployment totaled 12.179 million.

The unemployment rate among youth, aged below 25, was stable at 15.6 percent in January.