Inflation Eases in German States, Signals National Dip

Inflation decreased in several German states in February, indicating a potential drop in the national rate. North Rhine-Westphalia saw inflation fall to 1.8%. Bavaria and Lower Saxony reported rates of 1.9%, compared to 2.1% in January. Eurozone inflation reached a 16-month low in January.

In February, inflation rates eased across several German states, according to recent official data released on Friday. This trend hints at a possible decline in the national inflation rate for Germany, Europe's largest economy, with official figures expected later today at 2 p.m. (1300 GMT).

In North Rhine-Westphalia, the most populous German state, inflation fell below the significant 2% mark, landing at 1.8% year-on-year. Similarly, Bavaria's inflation decreased to 1.9% in February from 2.1% in January, while Lower Saxony mirrored this drop, recording 1.9% from January's 2.1%. Economists familiar with the matter indicated a steady harmonised national inflation rate in Germany, predicted to hold at 2.1% year-on-year from the previous month.

On a broader scale, the eurozone recorded a notable inflation reduction, reaching a 16-month low of 1.7% in January. This figure falls below the European Central Bank's target of 2%, prompting caution among policymakers who fear that this could denote a significant slowdown in price growth.

(With inputs from agencies.)