Inflation in the euro zone will fall more rapidly this year than initially expected, the European Commission said on Wednesday.
The EC has released its latest spring economic forecasts, saying euro zone inflation is likely to fall from 5.4% in 2023 to 2.5% this year and 2.1% in 2025.
In its previous forecast released in February, the EC expected inflation to reach 2.7% in 2024 and 2.2% next year.
The report predicted that energy inflation would continue to rise gradually, while disinflation would be driven by non-energy products and food. Services inflation was expected to decline “gradually as wage pressures ease”.
The report said growth was stronger than expected in early 2024, supported by continued declines in inflation.
In the euro area, GDP rose by 0.3% in the first quarter and is expected to reach 0.8% in 2024, or 1.0% for the euro area as a whole.
The euro area's GDP was expected to reach 1.4% in 2025.
However, the report also warned of increased uncertainty and downside risks “primarily resulting from Russia's long war of aggression against Ukraine and the development of the conflict in the Middle East.”
“Furthermore, sustained inflation in the United States could lead to further delays in rate cuts in the United States and elsewhere, resulting in some tightening of global financial conditions.”
Economic Commissioner Paolo Gentiloni said: “The EU economy recovered markedly in the first quarter, showing that we have turned the corner after a very difficult 2023.”
“We expect growth to accelerate moderately this year and into next as consumer spending is supported by falling inflation, a rebound in purchasing power, and continued employment growth.”
