Inflation in the Eurozone is falling

As of: April 3, 2024 12:14 p.m

Inflation is on the decline in Europe. The March value was below the experts’ expectations. Price increases have slowed, especially for food. Inflation has also fallen in Germany.

Inflation in the euro zone has weakened more significantly than economists expected. However, the prices for different goods and services developed very differently.

According to preliminary data, the March value brought a price increase of 2.4 percent compared to the same month last year, according to the European statistics office Eurostat. The year-on-year price increase was 0.2 percentage points less strong than in February, as Eurostat in Luxembourg announced in an initial estimate.

Food is slowly becoming more expensive

Economists had expected an inflation rate of 2.6 percent, similar to that in February. This brings the European Central Bank (ECB)’s goal of an inflation rate of 2.0 percent, which it considers to be the optimal level for the economy in the currency area, closer.

Energy prices fell by 1.8 percent in March compared to the same month last year. In February the decline was 3.7 percent. Prices for food, alcohol and tobacco, however, rose by 2.7 percent. In February they had increased by 3.9 percent year-on-year. Non-energy industrial goods only rose in price by 1.1 percent after the previous 1.6 percent.

“Inflation countdown running”

Services that are currently the focus of the ECB’s monetary authorities became 4.0 percent more expensive, as in February. Core inflation, which excludes volatile energy and food prices as well as alcohol and tobacco, continued to decline in March. It fell to 2.9 percent after 3.1 percent in February.

For Germany, the Federal Statistical Office reported a decline in inflation to 2.2 percent yesterday. “The inflation countdown is running like clockwork,” says Alexander Krüger, chief economist at Hauck Aufhäuser Lamp, about the current statistics: “To date, the inflation rate has fallen more sharply than generally expected. At the current level, a quasi-price stability has been achieved, which will hold for the time being .”

What is the ECB doing?

The fact that the European Central Bank will lower key interest rates in June in view of falling inflation is still controversial among experts. “The ECB cannot yet relax, even if inflation is no longer significantly above its target of two percent,” says Commerzbank chief economist Jörg Krämer, “because the increase in important service prices remained at a high 4.0 for the fifth month in a row Percent”.

For the next interest rate meeting next week in Frankfurt on April 11th, most economists are currently assuming that the Euro Central Bank will not turn the interest rate screw.

Jakob Mayr, ARD Brussels, tagesschau, April 3, 2024 12:16 p.m

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