Annual inflation rates in most European countries fell for the third consecutive month, moving closer to the target set by the European Central Bank. Consumer prices in the 20 countries that use the euro rose 2.4% in the year to March, down from 2.6% the previous month, the European Union said on Wednesday. .
The interest rate was slightly lower than economists expected, bringing overall inflation closer to the ECB’s 2% target at its next rate-setting meeting on April 11.
The central bank is also keeping a close eye on core inflation, which removes volatile food and energy prices. In the euro zone, energy prices rose to 2.9% in the year to March, falling below the 3% mark for the first time since Russia’s all-out war with Ukraine broke out in February 2022.
In Germany, the eurozone’s largest economy, consumer prices rose at an annual rate of 2.3% in March, the lowest inflation rate since June 2021.
The latest figures would support the view that the ECB could soon start cutting interest rates, which it kept at 4% last month. But analysts believe the central bank will wait for further evidence that the cooling trend is sustained.
“Although core inflation has eased, the robustness of services inflation and the ECB’s call for further wages data make an April rate cut unlikely,” Rory Fennessy, an economist at Oxford Economics, said in a note. .
U.S. inflation has cooled but faces a difficult road ahead, reinforcing the Federal Reserve’s decision to proceed cautiously with any potential interest rate cuts. The Bank of England is also keeping interest rates relatively high, with signs that UK inflation is slowing.
