FX.co ★ Eurozone Inflation Slows to 1.7% in January

Euro area annual inflation decreased to 1.7% year-on-year in January 2026, down from 2.0% in December, aligning with market expectations. This represents the lowest inflation level since September 2024. This decline corresponds with the euro reaching a more than four-year peak, exceeding $1.20 by the end of the month. The inflation rate for services dipped to a four-month low of 3.2%, while energy prices saw a sharper decline, falling 4.1% after a 1.9% drop in December. Conversely, inflation rates for unprocessed food increased (4.4% from 3.5%) and non-energy industrial goods saw a slight rise (0.4% from 0.3%), with price growth for processed food, alcohol, and tobacco steady at 2.1%. Core inflation, which excludes sectors such as energy, food, alcohol, and tobacco, fell to 2.2%, marking the lowest point since October 2021, and was marginally lower than the anticipated 2.3%. Among major eurozone economies, the Harmonized Index of Consumer Prices (HICP) decreased in France (0.4% from 0.7%), Spain (2.5% from 3.0%), and Italy (1.0% from 1.2%), yet experienced a slight increase in Germany (2.1% from 2.0%).