Inflation in the euro zone unexpectedly fell last month, with consumer prices rising 2.4% in the year to March as price pressures in the single currency area continued to ease.
This was down from 2.6% in February, the European Union Statistics Office said, as falling energy prices pushed down overall inflation. Economists had expected 2.5%.
Core inflation, which excludes volatile food and energy costs, fell from 3.1% to 2.9%, while in Germany inflation fell to 2.3% (down from 2.7% in the previous month and in France from 3.2% to 2.4%). .
This is the first time in two years that the core inflation rate has fallen below 3%.
Eurostat further predicted that the highest annual rate in March will be in services at 4.0%, stable compared to February, followed by food, alcohol and tobacco at 2.7% (compared to 3.9% in the previous month). He added that
Non-energy industrial products decreased by 1.1% versus 1.6%, and energy decreased by 1.8% versus 3.7%.
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“With inflation moving slightly closer to the European Central Bank's 2% target level, investors are more confident that a rate cut is on the horizon,” said Michael Field, European market strategist at Morningstar. Probably.''
Falling inflation has raised hopes that the European Central Bank (ECB) will cut interest rates, with the ECB widely expected to ease monetary policy at its June meeting.
However, it is expected to leave interest rates unchanged at its next meeting on April 11, as further data on wage growth is released in May.
Carsten Brzeski, global head of macro at ING, said the figures from Germany, the euro zone's largest economy, “provide some comfort to the ECB.”
Separately, it is also new that the unemployment rate in the euro area was 6.5% in February, remaining flat even after January's figure was revised upward from 6.4% to 6.5%. revealed by the data. The consensus estimate was 6.4%.
See: How does inflation affect interest rates?
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