Euro area annual inflation is expected to be 5.8% in February 2022, up from 5.1% in January, according to a flash estimate from Eurostat, the statistical office of the European Union.
One of the main drivers of the inflation, energy, is expected to have the highest annual inflation rate in February at 31.7%. This is up almost 3% from the 28.8% rate of annual inflation in January alone.
The Eurostat data means that energy in January 2022 was 28.8% more expensive than it was in January 2021, while energy in February 2022 is now estimated to have been 31.7% more expensive than that during the same month last year.
Annual inflation in food, alcohol and tobacco is estimated to have increased 0.5% in the last month, up to 4.1% from 3.5% in January.
Non-energy industrial good annual inflation will increase by 0.9% from 2.1% in January to 3.0% for February, according to the Eurostat flash estimate.
A smaller rate of annual inflation is estimated for services in the euro area, up to 2.5% from the 2.3% in January.
The euro area consists of Belgium, Germany, Estonia, Ireland, Greece, Spain, France, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Austria, Portugal, Slovenia, Slovakia and Finland.
Annual inflation is the change of the price level of consumer goods and services between the current month and the same month of the previous year. Monthly inflation is the change of the price level between the current month and the previous month.
Eurostat estimates that annual inflation in Ireland was 5.7% in February 2022, just 0.1% behind the wider euro area average.
The estimate would mean that goods and services purchased in Ireland in February 2022 were 5.7% more expensive than they were in the same month in 2021.
The country within the euro area with the highest rate of annual inflation estimated for February was Lithuania, at 13.9%.
In its Winter 2022 Economic Forecast, the European Commission estimated that inflation in the euro area would peak in the first quarter of 2022 and remain above 3% until the third quarter of the year. However, it now remains uncertain how Russia’s recent invasion of Ukraine will affect this.
The Commission had predicted that the pressures from supply constraints and energy prices would fade and said that inflation would be expected to decline markedly in the final quarter of 2022 and settle at below 2% in 2023.
The main indicator of this estimated trend, supply constraints and energy prices, have now been affected by the war in eastern Europe.