European Central Bank officials caution that euro‑area inflation is likely to rebound, with the services sector showing a sharp rise in price pressures despite modest growth in overall activity. The Purchasing Managers Index for January stayed above 50, signalling a fragile expansion, but the services PMI fell to 51.9, the lowest in four months, and price growth in that sector hit the highest level since April 2024. ECB expects inflation to average 1.9 % in 2026 and 1.8 % in 2027, a slight decline from current levels. German PMI rose to 52.5, its strongest in three months, but the overall outlook remains cautious as policymakers weigh the risk of a renewed inflationary surge.
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