FRANKFURT, Germany (AP) – Inflation weighing on European shoppers eased in March as price hikes in grocery aisles eased and overall price increases fell in two years and March. fell more than expected to 2.4%. Germany, the largest economic power And France.
The annual figure for the 20 countries using the euro currency was lower than the 2.5% expected by financial markets. European Central Bank moves closer to inflation target 2%.
However, the analyst 2.6% in Februaryis welcome, but likely not enough to bring forward the ECB's first rate cut.
The bank's rate-setting council will meet next week, but the first reduction in borrowing costs is not expected until June. economy not growingsaid multiple analysts.
food inflation Energy prices fell by 1.8%, falling from 3.9% to 2.7%, according to figures released by the European Union's statistics agency Eurostat on Wednesday. Meanwhile, core inflation, which excludes volatile food and energy costs, fell to 2.9% from 3.1% in February.
Annual inflation fell to 2.3% in Germany from 2.7% last month, and to 2.4% in France from 3.2%.of Data from Germany Being Europe's biggest economy “brings some comfort to the ECB,” said Carsten Brzeski, global head of macro at ING Bank.
But prices for services, which include everything from movie tickets to healthcare, remain high and ECB officials will want to see the latest figures on wage increases, analysts say.
“We think the ECB will start cutting rates in June,” said Rory Fennessy, senior economist at Oxford Economics. “Although core inflation has eased, the persistence of services inflation and the ECB's call for further wage data make an April rate cut unlikely,” he said.
America The Fed is also expected to cut interest rates. later this year. Fed officials decided to cut interest rates three times even though the decline in inflation has slowed.
In Europe, the inflation rate rose to a record high of 10.6% in October 2022. Russia has shut off most of its natural gas supply Dispatched to the continent over the Ukraine war, Energy prices are rising And creating a cost of living crisis.
with loss of affordable gas supply; While electricity is needed to heat homes, generate electricity and power factories, the fallout from the pandemic has also strained supply chains and helped push up inflation.
Price pressures have eased, but now Workers want higher wages to compensate for lost purchasing power. This slowed the decline in inflation and made the ECB wary of cutting interest rates too soon.
The ECB rapidly raised its key policy interest rate from -0.5% to a record high of 4% from July 2022 to September 2023. Raising interest rates fights inflation by increasing credit, encouraging people to buy, curbing spending, and easing upward pressure on prices.
But rate hikes can also hamper economic growth, and the focus now is on when the ECB will declare victory over inflation and start cutting rates to support the stalled economy. The economic slowdown came as inflation drained purchasing power from consumers' pockets and interest rates began to rise.
The eurozone economy will not grow in the last three months of 2023, with statistics for the first three months of the year due to be released on April 30.
