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Inflation for the euro area probably increased to an annual rate of 2.5% in January, according to official figures, with the cost of services and food, alcohol and tobacco growing at the fastest pace. In December, inflation was at 2.4%.
Services inflation is expected to stand at 3.9% in January, compared with 4.0% in December, while food, alcohol and tobacco are expected to slip to 2.3%, compared with 2.6% in December. Energy price increases are set to hit 1.8%, compared with 0.1% in December.
The latest reading poses an interesting question for the the European Central Bank, which is expected to implement back-to-back interest rate cuts at least until July in an effort to shield the weak euro zone economy.
The central bank cut rates last week by a quarter-point, as expected, in an effort to support economic growth and tackle stubborn inflation. After lowering key rates again in December, the benchmark rate on deposit facility has now fallen from 3% to 2.75%, its lowest level since early 2023.
Read more: Bank of England set to cut interest rates to 4.5%
On Monday, ECB policymaker Gediminas Simkus said he expects a March cut as well as a "couple more" in the following months.
The latest tariff threats by US president Donald Trump will now be a factor in these considerations, however.
"It will definitely happen with the European Union," said Trump on tariffs. "I can tell you that, because they've really taken advantage of I said, you know, we have over $300bn deficit.
"They don't take our cars, they don't take our farm products. They take almost nothing, and we take everything from the millions of cars, tremendous amounts of food and farm products. So the UK is way out of line, and we'll see the UK, but European Union is really out of line."
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