FRANKFURT- Euro zone inflation dipped a bit less than expected last month but its most closely watched component also dropped, sealing the case for another ECB interest rate cut on Thursday and solidifying bets for further policy easing in the coming months.
Consumer price inflation in the 20 nations sharing the euro slowed to 2.4 percent in February from 2.5 percent a month earlier, just above expectations for 2.3 percent and moving a step closer to the European Central Bank’s 2 percent target, data from Eurostat showed on Monday.
Excluding volatile food and fuel prices, a closely watched ‘core’ figure, also slowed to 2.6 percent from 2.5 percent as services inflation, a key worry for most of the past year, finally started to move lower, possibly breaking out of a stubbornly high range.
The key upside surprise came in unprocessed food prices with inflation for this component more than doubling to 3.1 percent.
The ECB has cut interest rates five times already since last June in a nod to quickly slowing inflation and the bank is expected to keep on cutting as the need to prop up weak economic growth is starting to override concerns about excessive price growth.
