European Commission Projects Inflation Rate to Decrease to 2.5% in 2024

The European Commission has projected that the inflation rate in the eurozone will continue to decrease, reaching 2.5% in 2024, a downward revision from the previous 2.7%. In its latest "Spring Forecast", the Commission indicated that the single currency bloc will experience a growth rate of 0.8% this year, despite global uncertainty.

Uncertainty Remains High

Paolo Gentiloni, the European Commissioner for Economy, stated: "Our forecast remains subject to high uncertainty, and with two ongoing wars near our borders, downside risks have increased."

Inflation Rate to Reach ECB's Target

The spring forecast, based on a more pronounced slowdown in consumer prices than expected, reflects the positive figures recorded at the beginning of the year. These rates are approaching the European Central Bank's (ECB) 2% target for 2024. In this context, the European Commission declared that inflation is expected to decrease further and reach the ECB's target next year.

Deflation Driven by Non-Energy and Food Goods

The deflation is expected to be mainly driven by non-energy and food goods, while energy inflation will increase slightly, and service inflation will decrease gradually, accompanied by a moderation of wage pressures. Inflation in the entire EU is expected to follow a similar trajectory, although slightly higher.

EU Economy Shows Signs of Recovery

According to Paolo Gentiloni, the EU economy has clearly recovered in the first quarter, indicating that it has turned a corner after a difficult 2023.

Employment on the Rise

Meanwhile, employment increased by 0.3% in the first quarter, confirming reports that the labor market continues to tighten as businesses accumulate workforce in anticipation of a growth rebound.