According to the latest data from Eurostat, headline inflation in the Euro area fell below market expectations, moderating to 2.4% year-on-year in March, down by 20 basis points from February’s 2.6%.
The report indicates a decline in prices across various sectors, with notable moderation observed in food, alcohol, and tobacco, as well as non-energy industrial goods. Energy costs remained negative but with a softer pace of decline compared to the previous month.
On a month-on-month basis, consumer prices continued to rise for the second consecutive month, reaching 0.8% in March, marking the highest level since March 2023. Analysts attribute this increase to various factors, including favorable statistical base effects from the previous year.
Experts anticipate a moderation in consumer prices in the short term, mainly due to the favorable statistical base effects from the corresponding periods of the prior year. However, they caution that recent spikes in crude oil prices and wage increases could pose a downside risk to these expectations.
Given the prevailing economic conditions, the European Central Bank (ECB) is expected to maintain its ‘HOLD’ stance at its next meeting in April. There is a possibility that the ECB may consider its first rate cut during the June policy meeting, depending on evolving economic indicators and inflationary pressures.
