Inflation in the euro zone slowed to 2.4% last month, increasing expectations that the European Central Bank (ECB) will cut interest rates in June.
Inflation rates in 20 countries fell 0.2 percentage points from 2.6 percent in February, in line with preliminary forecasts released earlier this month, the European Union's statistics agency Eurostat said. It was the lowest price in four months.
Even though services inflation remained stable at 4%, underlying price growth, excluding volatile food and energy prices, fell from 3.1% to 2.9%.
In March, services saw their highest annual increase of 4% compared to February. This was followed by food, alcohol, and tobacco at 2.7%, down from 3.9% the previous month.
Meanwhile, non-energy industrial products rose 1.1%, down from 1.6% in February, and energy prices fell 1.8%, but a slower decline than February's 3.7% decline.
The inflation rate has fallen rapidly over the past year from a peak of 11.5% in October 2022 to near the central bank's target of 2%, raising expectations that interest rate cuts will begin as early as June. There is.
Money markets are currently pricing in a 75 basis point (bp) rate cut this year. Two months ago, economists expected the central bank to cut interest rates at least four or five times in 2024, each by at least 0.25%.
Last week, ECB President Christine Lagarde said: “The latest assessment of the inflation outlook, underlying inflation trends and the strength of monetary policy spillovers provide further confidence that inflation is sustainably converging on target.'' If they do, it would be appropriate to lower the current level of monetary policy constraints.
He also remained neutral on the rate cut, delaying any decision until June when “more information” is available. This was despite a “small number of member states” preparing to cut interest rates in April.
read more: Bank of England signals interest rate cuts, UK inflation falls to 3.2% in March
Wednesday's latest data also revealed that the lowest annual rates were in Lithuania at 0.4%, Finland (0.6%) and Denmark (0.8%).
The highest annual rates were in Romania at 6.7%, in Croatia at 4.9%, and in both Estonia and Austria at 4.1%.
Among the other big four EU countries, Spain (3.5%) and France (3.4%) reported inflation rates above the EU average, while Germany (3.1%) reported the same level as the EU. The UK inflation rate was 4.2%.
Compared to December, annual inflation rates fell in 15 EU countries, remained stable in one country and rose in 11 others.
See: How does inflation affect interest rates?
Download the Yahoo Finance app. apple and android
