Eurozone, inflation drops in March: 2.4 percent

Brussels – Good news for the eurozone: in March, inflation is expected to stand at 2.4 percent, down 0.2 percentage points from February,  according to preliminary data released by Eurostat. The March data confirm a general months-long trend and bring the Eurozone figure closer to the European Central Bank’s benchmark target of 2 percent.

Looking at the main components of euro area inflation, there was a slowdown in consumer prices for food, alcohol, and tobacco (2,7 percent in March, compared to 3.9 in February), and a decline also for non-energy industrial goods (1.1 percent versus 1.6 percent in February). In contrast, the cost for services was stable (4 percent). 

At the country level, there was a fall in inflation in Germany (from 2.7 percent to 2.3 percent between February and March) and France (from 3.2 percent to 2.4 percent). On the other hand, in Italy, inflation is expected to rise from 0.8 percent to 1.3 percent, still below the benchmark target. Moving away instead are Spain (3.2 percent, +0.3 percentage points), the Netherlands (3.1 percent, +0.4 percentage points), and Belgium (3.8 percent, +0.2 percentage points).

ECB President Christine Lagarde will closely monitor these data before the April 11 Governing Council meeting. While no interest rate cuts are anticipated, Lagarde has hinted that a decision may be taken in June when the central bank will have access to more extensive and inclusive information. However, she indicated the April data will be crucial for the choices that will have to be made to bring inflation back to the desired levels. The varying trends will certainly impact the decision.

The full data will be released on April 17 when Eurostat will announce if the preliminary estimates are confirmed. They will come out after the ECB’s monetary policy decision meeting, with the central bank still counting on a renewed trend.