Eurozone inflation confirmed at 16-month low of 1.7%

LaToya Harding · Business Reporter, Yahoo Finance UK

Wed, 25 February 2026 at 9:19 pm GMT+9 2 min read

Eurozone inflation officially fell to a 16-month low in January, final estimates from Eurostat confirmed on Wednesday. It came amid a larger fall in energy prices, as well as a slowdown in processed food and services inflation.

The annual change in the eurozone consumer price index came in at 1.7% last month, down from 2.0% in December and in line with the preliminary estimate released three weeks ago. A year earlier, the rate was 2.5%.

**Read more: **Bank of England governor suggests new interest rate cut in March

It was also the first final print below the European Central Bank’s (ECB) 2% target since May 2025.

Meanwhile, European Union (EU) annual inflation was 2.0% in the year to January, down from 2.3% in December and 2.8% a year earlier.

Energy prices across the single-currency region fell by 4.0% year-on-year in January, following a 1.9% decline in December.

Food, alcohol and tobacco inflation picked up to 2.6% from 2.5%, though eased for processed food, alcohol and tobacco to 2.0% from 2.1%. Excluding the more volatile energy, food, alcohol and tobacco items, core inflation slowed to 2.2% from 2.3%, as services inflation fell to 3.2% from 3.4%.

The lowest annual rates of inflation were registered in France (0.4%), Denmark (0.6%), Finland and Italy (both 1.0%). The highest annual rates were recorded in Romania (8.5%), Slovakia (4.3%) and Estonia (3.8%).

Compared with December 2025, annual inflation fell in twenty-three member states, remained stable in one and rose in three.

Ipek Ozkardeskaya, senior analyst at Swissquote said that softening inflation “could allow the European Central Bank to act if trade tensions flare and threaten economies.”

**Read more: **ECB holds interest rates at 2% after eurozone inflation drops in January

Earlier this month the ECB left interest rates on hold at 2%, meaning that rates across the eurozone have been paused for a fifth consecutive time, since June last year when inflation slipped back to the bloc’s target.

But economists still expect no change in the coming months from the ECB, which has predicted that inflation will average 1.9% in 2026 after hovering at 2.1% last year.

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