The eurozone's annual inflation rate fell further than expected in March, official data showed on Wednesday, raising hopes that the European Central Bank would cut interest rates in June.
Consumer price inflation in the single currency area slowed to 2.4% from 2.6% in February, the EU Statistics Office said.
Analysts surveyed by FactSet expected inflation to hold steady at 2.6%, while economists asked by Bloomberg expected it to fall to 2.5%.
This number is close to the ECB's 2% target and would strengthen the case for a June rate cut, although analysts do not expect a rate cut at the next monetary policy meeting on April 11. do not have.
The Frankfurt-based lender has kept interest rates on hold since October 2023 after an aggressive rate hike campaign to curb soaring inflation.
Inflation in the euro area has fallen significantly from the peak of 10.6% reached in October 2022, following Russia's invasion of Ukraine and the subsequent impact on Europe's energy costs.
Core inflation, which subtracts the volatile prices of energy, food, alcohol and tobacco, the ECB's key indicator, also fell further than expected to 2.9% in March from 3.1% in February.
Analysts at Bloomberg and FactSet had expected core inflation to fall to 3.0%.
“The decline in both headline and core inflation in March means it is very likely that the ECB will start cutting interest rates in June,” said Andrew Kenningham of London-based consultancy Capital Economics. It suggests that.”
Rory Fennessy, senior economist at Oxford Economics, said: “Although core inflation has eased, the strength of services inflation and the ECB's demand for further wages data make an April rate cut unlikely.”
Energy prices in the euro area also fell, but last month's 1.8% drop was much smaller than the 3.7% drop in February.
Lithuania had the lowest inflation rate in the European Union at 0.3% in March, according to Eurostat data.
France and Germany, the EU's two largest economies, also saw a welcome slowdown in consumer price growth.
Germany's annual inflation rate was 2.3% in March, down from 2.7% in February.
In France, inflation was 2.4% in March, significantly lower than the 3.2% recorded the previous month.
Other Eurostat data released on Wednesday showed the single currency area's unemployment rate remained stable in February at 6.5%, the same as in January.
Previous data had put the unemployment rate in January at 6.4%, but authorities revised that figure in Wednesday's release.
