The Eurozone's annual inflation rate climbed to 2.5 percent in January, up from 2.4 percent in December 2024, according to a flash estimate released by Eurostat on Monday.

Services are expected to record the highest annual inflation rate of 3.9 percent, down from 4 percent in the previous month. Inflation for food, alcohol, and tobacco stood at 2.3 percent, lower than 2.6 percent in December.

Energy prices registered a sharp rise in annual inflation, increasing from 0.1 percent in December to 1.8 percent in January, while non-energy industrial goods inflation remained stable at 0.5 percent.

Among eurozone members, Croatia recorded the highest inflation rates at 5 percent, followed by Belgium at 4.4 percent and Slovakia at 4.1 percent.

The main EU economies registered the following inflation rates in January: Germany at 2.8 percent, France at 1.8 percent, Italy at 1.7 percent, and Spain at 2.9 percent.

"Inflation rose from 2.4 percent to 2.5 percent in January, marking the fourth consecutive increase for the Eurozone," said Bert Colijn, ING's chief economist of the Netherlands.

While inflation is expected to moderate over the year, Colijn cautioned that risks remain, including rising energy costs and the potential for a tariff dispute between the United States and the European Union.

Last week, the European Central Bank (ECB) announced a 25-basis-point interest rate cut in response to sluggish economic data in the eurozone. The decision was based on "an updated assessment of the inflation outlook, the dynamics of underlying inflation, and the strength of monetary policy transmission," the ECB said in a press release.

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