Inflation in the Eurozone fell to 2.4 percent

The downward trend in inflation in the Eurozone continues. Annual inflation, which was 2.6 percent in February, fell to 2.4 percent in March. Inflation in Germany was announced as 2.3 percent.

Annual inflation in the Eurozone, which consists of 20 countries using the Euro as a currency, fell to 2.4 percent in March.

The inflation rate announced by Eurostat, the statistical agency of the European Union (EU), was lower than expected.

Analysts participating in the FactSet survey expected a 2.6 percent increase in consumer prices, while economists who gave their opinions to Bloomberg expected a 2.5 percent increase.

Annual inflation in the Eurozone was recorded as 2.6 percent in February.

Eurostat data revealed that core inflation, which was 3.1 percent in February, was determined as 2.9 percent in March. Bloomberg and FactSet analysts expected core inflation to be 3 percent.

The core inflation rate refers to the rate of price increases in goods and services excluding items such as food and energy. Many analysts see this data as a more important indicator in terms of interpreting the change in prices more accurately and making a better forecast. The European Central Bank also considers core inflation as the main indicator. Translated with DeepL.com (free version)

Inflation in Germany 2.3 percent

The annual rate of increase in food prices was 2.7 percent in March, down from 3.9 percent in February. Energy prices also continued to fall. However, the annual rate of decline slowed from 3.7 percent in February to 1.8 percent last month.

Eurostat data pointed to a slowdown in consumer price growth in Europe's two largest economies, Germany and France. Germany's inflation rate fell from 2.7 percent in February to 2.3 percent in March. In France, inflation fell from 3.2 percent in February to 2.4 percent last month.

The lowest inflation rate in the European Union in March was recorded in Lithuania with 0.3 percent.

Interest rates could be cut in June

The Eurozone moved one step closer to the European Central Bank's 2 percent inflation target with data for March. However, analysts believe that this development is not yet enough for the Frankfurt-based bank to cut interest rates. Many analysts do not expect the bank, which will meet on April 11, to cut interest rates until June.

Inflation in the Eurozone has been steadily declining after peaking at 10.6 percent in October 2022 due to the war in Ukraine.

As part of the fight against inflation, the European Central Bank raised the interest rate from 0.5 percent in July 2022 to 4 percent in September 2023. Since then, the Bank has kept interest rates at this record-high level.

Higher interest rates lead to lower spending and reduce pressure on prices. But high interest rates can also hamper economic growth.

So all eyes are now on when the European Central Bank will declare victory over inflation and start cutting interest rates to shoulder the stagnating European economy.

The Eurozone economy did not grow in the last quarter of 2023. Data for the first quarter of this year will be released on April 30.

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