Inflation in the eurozone slowed further in March, driven by a decline in energy tariffs and moderated price increases in the services sector, the European Union’s statistics agency, Eurostat, reported on Tuesday.
Consumer prices in the 20-nation currency bloc rose by 2.2 percent year-on-year, slightly down from February’s 2.3 percent, bringing the figure closer to the European Central Bank’s (ECB) two-percent target.
The eurozone has witnessed a gradual cooling of inflation since its peak in October 2022, following Russia’s invasion of Ukraine, which triggered soaring energy prices. The ECB, which had previously hiked interest rates to curb inflation, has now shifted its focus toward boosting the region’s struggling economy.
Last month, the ECB cut its benchmark deposit rate by a quarter of a percentage point to 2.5 percent. However, ECB President Christine Lagarde warned of potential risks, including U.S. tariff threats and significant German fiscal spending plans.
Investment analysts at Capital Economics stated that the latest dip in inflation “strengthens the case for the ECB to cut interest rates at its meeting on April 17,” with expectations of another quarter-point reduction.
Breaking down the latest figures, inflation in services slowed to 3.4 percent in March, down from 3.7 percent in February, while energy prices registered a negative growth of 0.7 percent, following a 0.2 percent increase the previous month. However, food-price inflation ticked upward slightly.
Core inflation, which excludes the volatile categories of energy and food, also eased from 2.6 percent in February to 2.4 percent in March, reinforcing hopes of a sustained disinflationary trend.
Despite these improvements, economists caution that geopolitical developments, particularly U.S. President Donald Trump’s anticipated announcement of sweeping trade tariffs, could drive inflationary pressures higher and hinder economic growth. The latest round of U.S. tariffs is expected to be unveiled on Wednesday.
