Euro zone inflation eased to 2.2% in March, slightly below the 2.3% recorded in February, according to flash data from Eurostat. This dip in annual inflation marks a moderate decline, with core inflation—excluding volatile sectors like food, energy, alcohol, and tobacco—falling to 2.4% from 2.6% the previous month. Services inflation, which had been persistently high, also saw a decrease, dropping from 3.7% in February to 3.4% in March.
Preliminary figures for key euro zone economies reflected similar trends. Inflation rates in Germany and Spain fell to 2.3% and 2.2%, respectively, while France saw its rate hold steady at 0.9%. The March data came in lower than expected in several major euro zone economies, further indicating a general easing of inflationary pressures across the region.
The inflation figures have raised market expectations for a potential interest rate cut from the European Central Bank (ECB). A 25-basis-point reduction is now widely anticipated in the upcoming ECB meeting on April 17, with market predictions showing a 76% chance of this move. The central bank’s response could be crucial in managing the region’s economic conditions amid ongoing inflationary concerns.
The looming imposition of U.S. tariffs, including a 25% levy on imported cars, adds to the uncertainty surrounding the euro zone economy. While the precise effects of these tariffs remain unclear, many economists have warned that they could further strain inflation levels. As the EU braces for potential retaliatory measures, the economic implications of these new trade tensions are expected to unfold in the coming months.
Source: CNBC