Annual inflation in the Euro Area was confirmed at 1.7% in January 2026, down from 2.0% in December and at its lowest level since September 2024. The slowdown coincided with a strong appreciation of the euro, which rose above $1.20 at the end of the month, its highest level in more than four years.
Price growth eased for both services (3.2% vs 3.4% in December) and processed food, alcohol, and tobacco (2.0% vs 2.1%), while energy prices declined more sharply, falling 4.0% after a 1.9% drop in December. In contrast, inflation accelerated for unprocessed food (4.2% vs 3.5%) and non-energy industrial goods (0.4% vs 0.3%).
Core inflation, which excludes energy, food, alcohol, and tobacco, decreased to 2.2%, its lowest rate since October 2021. Among the largest eurozone economies, harmonized inflation weakened in France (0.4% vs 0.7%), Spain (2.4% vs 3.0%), and Italy (1.0% vs 1.2%), while it inched up in Germany (2.1% vs 2.0%).
