The final data published by Eurostat showed that consumer price growth slowed in March, confirming experts' forecasts and preliminary estimates. Meanwhile, core inflation fell to its lowest level since February 2022.
According to the report, the consumer price index rose by 2.4% per year after an increase by 2.6% per year in February. European Union annual inflation was 2.6% in March, down from 2.8% in February.
Meanwhile, on a monthly basis, the consumer price index rose by 0.8%, confirming economists' forecasts and accelerating compared to February (+0.6%). This was the sharpest price increase since March 2023.
Eurostat reported that the core consumer price index - excluding energy, food, alcohol and tobacco - rose by 2.9% per year, as expected, after an increase by 3.1% per year in February. Core inflation has been declining for the 8th month in a row.
The data also showed that the largest contribution to the annual inflation was made by services (+1.76%), food, alcohol & tobacco (+0.53%), non-energy industrial goods (+0.30%) and energy (-0.16%).
The lowest annual rates were registered in Lithuania (0.4%), Finland (0.6%) and Denmark (0.8%). The highest annual rates were recorded in Romania (6.7%), Croatia (4.9%), Estonia and Austria (both 4.1%).
Overall, the latest data reinforced expectations of an interest rate cut by the European Central Bank at its June meeting, even though rising energy prices and a weak euro cloud the outlook. The euro has fallen by about 4% against the dollar since the beginning of the year, and this movement is compounded by the expectation of a slower rate cut by the Fed, given persistent inflation. Policymakers have so far stated that changes in oil prices and the exchange rate are too small to fundamentally change the inflation forecast, but investors now expect a rate cut of only 75 basis points this year, or two moves after June, a retreat compared to two months ago when between 4 and 5 cuts were seen.