At the start of 2024, the year-on-year variation in consumer prices (within the meaning of the Harmonised Index of Consumer Prices, HICP) fell back in the four main Eurozone economies in varying degrees. In all countries, this slowdown was driven by the prices of food and manufactured goods, however the situation was much more varied regarding energy prices: overall in recent months these have made a negative contribution to HICP in Italy and also, to a lesser extent, in Germany and Spain, while in France they are a little higher than a year ago. However, in terms of comparisons with before the health crisis, Italy and Germany have seen a more pronounced increase in energy prices, with Italian consumers hit by electricity price hikes, and Germans by gas price hikes. Conversely, in Spain energy prices have increased least compared to before the crisis, with the situation there more favourable both for gas and electricity, while France is in an intermediate position.

In H1 2024, governments’ withdrawal of price moderation measures, particularly energy prices, is likely to check the decline in inflation in all countries. In June 2024, inflation within the meaning of HICP is expected to be around 3.5% in Spain, 3% in Germany and 2% in Italy, with inflation in France a little below that of Germany. Inflation in Germany and Spain is likely to be around the same as at the beginning of the year, with the rise in energy inflation offset by the fall in other components. Inflation is expected to fall back in France, as the slowdown in food prices is more pronounced than elsewhere, while inflation in Italy is expected to rise, and move nearer to the level in other countries. It is still likely to remain below these levels, however, mainly because core inflation is more moderate, reflecting differences in wage dynamics.