Inflation in the eurozone is slowing faster this year, reaching 2.7%.

The European Commission predicted this Thursday that the eurozone inflation rate will slow faster this year, to 2.7%, due to a sharp fall in energy prices and moderate pressure, remaining at 2.2% in 2025.

In the interim winter forecasts released this Thursday, the community leader predicts that inflation, as measured by the Harmonized Index of Consumer Prices (HIPC), will slow from 5.4% in 2023 to 2.7% in 2024 and to 2.2% in 2025 in the single currency area. and that in the European Union (EU) it will fall from 6.3% last year to 3% this year and 2.5% next year.

In its previous autumn forecasts, published last November, Brussels predicted a fall in inflation for the eurozone from 5.6% in 2023 to 3.2% this year and 2.2% in 2025.

For the EU as a whole, in November the institute predicted a decline in inflation from 6.5% last year to 3.5% this year and 2.4% next year.

Speaking of a “positive development since autumn 2023 forecasts” for inflation, Brussels talks of a “faster-than-expected decline”, “driven” mainly by falling energy prices and easing pressure on other component prices in the second quarter of 2023 . half of last year, like other goods and services, due to stagnation of activity.

“Weaker-than-expected inflation results in recent months, lower energy prices and weaker economic performance have put inflation on a more pronounced downward path than expected in fall forecasts,” he said.

Despite this, he warns that in the short term, “the withdrawal of energy support measures in EU member states and increased maritime transport costs following trade disruptions in the Red Sea should put some pressure on price increases without derailing the process.” reducing inflation.”

These forecasts come as there are several blockages in the Red Sea, where Yemen’s Houthi militants are attacking merchant ships in retaliation for Israel’s war in the Gaza Strip.

There are concerns about possible price increases in the single currency area and the Union due to the attacks in the Red Sea, which have caused shipping disruptions and increased costs on trade routes between Asia and Europe.

“Despite slight upward pressure on maritime transport costs following trade disruptions in the Red Sea, core inflation continues to fall steadily,” the European Commission said.

So far no significant consequences have been recorded, but what is certain is that at the same time the European economy continues to show limited economic growth, still due to the consequences of another war, the war in Ukraine caused by the Russian invasion.

As economic activity struggles to recover from high inflation, prolonged disruption to supply chains could impact plans to cut interest rates given the European Central Bank’s (ECB) monetary policy focus on price stability.

In forecasts published this Thursday, Brussels even admits that “global inflation in the eurozone should be slightly above the ECB’s target, and inflation in the EU will be slightly higher.”

“Credit conditions continue to remain restrictive, but markets now expect the easing cycle to begin earlier. [pois] The EU labor market continues to show remarkable results,” the institution said in a statement.