Slovakia’s inflation cools while Italy posts a widening current‑account surplus amid shifting global dynamics

The euro-area economy is entering a new phase marked by easing price pressures and a renewed strengthening of external balances, offering cautious optimism for policymakers navigating a still‑uncertain global environment. In recent months, inflation across the monetary union has slowed, reflecting both improved supply conditions and diminished cost shocks. While economists caution that underlying price growth remains uneven, the overall trajectory suggests that the period of intense inflation seen in the past few years is gradually receding.

Slovakia provides one of the clearest examples of this cooling trend. After a prolonged stretch of elevated consumer prices, the country has seen an increasingly steady deceleration in annual inflation. Analysts attribute this easing to a combination of moderating food and energy prices, as well as the gradual stabilization of production inputs across the region. Businesses that previously grappled with shortages and rising operating costs are reporting more predictable supply cycles, and households are beginning to feel the effects of a more measured price environment.

Across the eurozone, the slowdown in inflation is being accompanied by a shift in consumer behavior. Spending patterns indicate a return to pre‑inflation habits, with households becoming more selective but less reactive to price volatility. In parallel, wage dynamics—once lagging behind the rapid rise in prices—have begun to align more closely with overall economic conditions. While wage‑driven inflation risks have not fully disappeared, the broader balance between labor markets and price stability appears more sustainable than in previous quarters.

Equally significant is the strengthening of external balances across several euro‑area member states. Italy, in particular, has seen a notable improvement in its current‑account position, reflecting the combined effects of resilient export activity, slower import growth, and evolving global demand. The country’s surplus expansion underscores the adaptability of its industrial base, which has benefited from recovering foreign markets and improved competitiveness. Stronger performance in sectors such as machinery, pharmaceuticals, and agri‑food products has helped reinforce Italy’s external footing.

This improvement carries broader implications for the euro area. A healthier external position bolsters financial stability and reduces vulnerability to global shocks—a concern that has loomed large amid recent geopolitical and trade tensions. Economists suggest that strengthened current‑account balances can also provide additional space for national fiscal strategies, particularly as governments weigh targeted support measures against the need to consolidate post‑pandemic budgets.

However, the path ahead is far from guaranteed. While inflation has eased, questions persist regarding the pace at which price growth will converge toward central‑bank targets. Factors such as energy supply disruptions, global shipping tensions, or renewed commodity pressure could reintroduce volatility. Similarly, improvements in external balances must contend with an uncertain global backdrop characterized by shifting trade alliances, technology‑driven competition, and evolving regulatory environments.

Looking forward, policymakers will continue to monitor whether the cooling inflation trend proves durable and whether external‑sector improvements can be maintained. The euro area’s current trajectory suggests a period of recalibration rather than complacency—one shaped by structural adjustments, evolving demand patterns, and the steady normalization of economic conditions.

For now, the easing of inflation in countries such as Slovakia, combined with Italy’s strengthening current‑account position, offers a measure of stability amid ongoing uncertainty. These developments may not signal a full return to pre‑crisis norms, but they do provide a foundation for a more balanced and resilient euro‑area economy in the months ahead.