Eurozone inflation eased to 2.4% in February, but was still slightly higher than analysts' expectations, preliminary data from the Eurostat statistics agency showed on Monday.
Economists polled by Reuters had expected inflation to ease to 2.3% from 2.5% in January.
Core inflation, which excludes energy, food, alcohol and tobacco prices, was 2.6% in February, down slightly from 2.7% in the previous month.
Services inflation, which has remained high in recent months, also eased slightly to 3.7% last month from 3.9% in January.
The report also showed a sharp slowdown in energy price increases, which rose just 0.2% in February from 1.9% in the first month of the year.
Jack Allen-Reynolds, deputy chief eurozone economist at Capital Economics, said the decline in headline inflation in February was a positive sign, partly due to a decline in services inflation.
He added that this trend is expected to continue and will significantly reduce the core inflation rate throughout the year.
However, headline inflation is expected to remain at current levels as energy prices are forecast to rise slightly and food inflation is expected to remain above 2%.
Analysts have warned that geopolitical uncertainties could weigh on inflation going forward.
According to Bert Colijn, Chief Economist for the Netherlands at ING, the uncertain global trade situation, including the possibility of a trade war and volatile energy prices, could weigh on the inflation outlook.
US President Donald Trump's repeated threats to impose tariffs on goods imported from Europe have sparked concerns among investors and economists.
Tariffs are often seen as a factor that increases inflation, and trade with the US is a key pillar for several major economies in Europe, especially Germany, the largest economy in the European Union.
Eurozone inflation picked up again in the fourth quarter of last year, but European Central Bank (ECB) policymakers remain optimistic about its trajectory.
The ECB’s January meeting minutes showed that policymakers believe inflation is on track to hit its 2% target, although some concerns remain.
The ECB is expected to meet again this week and is likely to announce another rate cut, which would be the sixth since the central bank began easing monetary policy in June last year.
Markets will also be paying attention to the ECB’s statement accompanying the rate decision, for clues about policymakers’ assessment of inflation and the tightening of monetary policy.
According to ING’s Colijn, the key question for the ECB is how far it will go in cutting rates.
He expects a 0.25 percentage point cut this week, but stressed that the debate will be more intense over when the ECB will reach its terminal rate.
The report comes after several major Eurozone countries released their inflation data last week.
Preliminary data showed that inflation in Germany remained unchanged at 2.8%, higher than expected, while in France, inflation fell sharply to 0.9%.
The readings have been adjusted across the Eurozone to ensure a fair comparison.
