Eurozone inflation drops to 8.5% in February: Eurostat

The annual rate of inflation within the eurozone was 8.5% in February, the EU's statistics agency said Thursday.

The fall from last month's figure of 8.6%, though, was less than expected, with analysts at financial data firm FactSet predicting a sharper fall to 8.2%, while the Bloomberg forecast was 8.3%.

While inflation was lower than the 10.6% high in October, fears lingered that the earlier surge in energy prices is now having a larger impact on the economy among the 20 countries that use the euro.

Annual inflation still remains higher than the European Central Bank's (ECB) objective of 2%.

Soaring food costs

A continued decline in energy costs had pushed consumer prices lower, but in February the rise in food and drink costs outpaced that of energy.

Eurostat showed that food and drink prices soared by 15% last month.

Luxembourg had the lowest inflation rate within the eurozone last month, at 4.8%, according to Eurostat, with Belgium next at 5.5% for the same period.

Germany's federal statistics office Destatis said on Wednesday that February's inflation rate was 8.7%, the same as the previous month

ECB: March will see an increase in interest rates

ECB President Christine Lagarde said last month that the institution plans to increase its interest rates by a half percentage point at March's meeting.

Lagarde said price decreases have been unstable and that rates will have to stay high for some time.

Last month, the EU published revised economic forecasts, saying the bloc will narrowly avoid a technical recession and has already passed its inflation peak.

jsi/nm (AFP, dpa Reuters)