Inflation in the eurozone peaked at 10.6 percent last October and has been slowly decreasing since then.
Energy prices remain the main driver of the eurozone's annual inflation rate, with a 17.2 percent increase compared to January 2022 (25.5 percent in December 2022), followed by prices of food, alcohol and tobacco with a year-on-year increase of 14.1 percent in January (13.8 percent in December 2022).
"The drop from 9.2 percent to 8.5 percent is faster than expected," Bert Colijn, senior economist for the eurozone at ING, explained. Food inflation remains stable at 14.1 percent, but energy drives the rate down at the start of the year. The drop from 25.5 percent to 17.2 percent reflects lower market prices and significant negative base effects, he said.
The year-on-year increase in energy prices peaked last October at 41.5 percent. Since then, energy prices have been decreasing.
Price ceilings for energy had an effect, according to Colijn, who expects energy prices to decline further. "In recent days, both the Brent oil price in euros and natural gas market prices have declined year-on-year, which will put more downward pressure on consumer prices in the coming months."
The Baltic countries projected the highest inflation rates for January: 21.6 percent for Latvia, 18.8 percent for Estonia, and 18.4 percent for Lithuania.
The countries with the lowest annual inflation rate include Spain and Luxembourg, both with 5.8 percent, as well as France with 7 percent.
However, data for Germany for January 2023 were not available in time for publication by Eurostat due to technical data processing issues, Colijn noted.
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