Eurozone inflation outlook improves inflation
Eurozone inflation came in at 1.7% on a yearly basis in January 2026, undershooting the European Central Bank’s (ECB) 2% target, as lower energy costs and a stronger euro helped push down consumer prices. The annual inflation figure was in line with economists’ forecasts.
Core inflation, which omits volatile food and energy prices, fell 0.1 percentage points to 2.2%, marking the lowest level since October 2021 at the start of the post-pandemic price surge. Even though inflation fell below the ECB’s target, people’s perceived inflation value still remains elevated.
ECB president Christine Lagarde argued that aligning perceived inflation with official inflation data could significantly strengthen the euro-area economy. That being said, she confirmed this mismatch is a common pattern seen across most countries.
According to ECB data, perceived inflation has always exceeded the official rate by an average of 1.2 percentage points.
UK consumer confidence falls to three-month low
UK consumer confidence worsened in February, wiping out the progress made over the previous two months, with survey respondents primarily expressing concerns over their future financial situations in the face of rising economic concerns.
The Gfk consumer index, which gives an indication of how households view their personal finances and the broader economic environment, dropped to -19 in February from -16 in January. This defied economists’ expectations, who had anticipated a third consecutive monthly gain.
Consumer confidence is closely seen as an indicator of future consumer spending patterns. The fall stands in stark contrast with other economic data suggesting the UK economy started the year on a stronger footing.
The survey also shows that people remain pessimistic about the broader economy, as unemployment reaches its highest level in nearly five years, creating further worries surrounding job security.
US jobless claims rise slightly
The number of Americans submitting new claims for unemployment benefits rose slightly last week by 4,000 to 212,000. The unemployment rate in February continued to hold steady, falling to 4.3% in January from 4.4% in December of 2025, reflecting a stable labour market.
According to the recent report from the Labour Department, the labour market seems to remain in a low-hire, low-fire environment.
Economists have replied that the current level of jobless claims aligns with their views on labour-market conditions which have reached a stable position and are expected to improve steadily throughout 2026.
Their main concern is about the low hiring rate, however, the trend in jobless claims suggests that employers are not reducing their workforce any further.
This article does not constitute legal and/or financial advice and is being issued for information purposes only by Bank of Valletta plc, 58, Zachary Street, Valletta. Bank of Valletta is a public limited company regulated by the MFSA and is licensed to carry out the business of banking and investment services in terms of the Banking Act (Cap.371 of the Laws of Malta) and the Investment Services Act (Cap.370 of the Laws of Malta).
