Frankfurt
Inflation, which is weighing on European shoppers, eased in March as soaring prices in grocery aisles eased and overall price increases were contained in Germany and France, the two largest economies. fell more than expected to 2.4%.
The annual rate for the 20 countries using the euro currency was below the 2.5% expected by financial markets, moving it closer to the European Central Bank's (ECB) inflation target of 2%.
But analysts expect the drop from February's 2.6%, while welcome, will not be enough to bring forward the ECB's first rate cut.
The bank will meet on April 11, but the first reduction in borrowing costs is not expected until June, despite slowing economic growth, analysts said.
Food inflation fell from 3.9% to 2.7% and energy prices fell by 1.8%, according to figures published yesterday by the European Union's statistics agency Eurostat. 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%. Carsten Brzeski, global head of macro at ING, said the statistics from Germany, Europe's largest economy, “bring some comfort to the ECB.”
But prices for services, which include everything from movie tickets to medical care, remain high.
The ECB also wants to see the latest figures on wage growth, which means “unless the economy falls off a cliff, the ECB will sit tight next week awaiting further data and the June Governing Council meeting.” said. .
The US Federal Reserve is also expected to lower interest rates by the end of the year. Fed officials decided to cut interest rates three times even though the decline in inflation has slowed.
