Inflation in the euro zone surprisingly continued its decline at the end of winter. Consumer prices in the 20-country community only rose by 2.4 percent in March compared to the same month last year, as the EU statistics office Eurostat announced. Economists had expected an inflation rate of 2.6 percent, similar to February.
This brings the European Central Bank’s goal closer. It aims for an inflation rate of less than 2.0 percent. She sees this level as optimal for the economy in the currency area. Recently, the voices among central bankers who expect a first interest rate cut in June have increased. ECB President Christine Lagarde said at an event in Frankfurt in March that the ECB would probably have enough certainty based on the economic data at its meeting on June 6 to decide on an initial interest rate cut. For the ECB meeting next week, most economists are currently assuming that key interest rates will initially remain constant.
According to Eurostat, the declining inflation in the euro area is reflected in energy prices. They fell by 1.8 percent in March compared to the same month last year. Prices for food, alcohol and tobacco rose by 2.7 percent. Services, which are currently the focus of the ECB, increased in price by 4.0 percent. Core inflation, which excludes volatile energy and food prices, fell to 2.9 percent in March.