Frankfurt Inflation in the euro area fell significantly in March. Consumer prices rose 6.9% percent compared to the same month last year. This was announced by the European statistical office Eurostat on Friday based on an initial estimate.
Economists surveyed by the Reuters news agency had previously expected a rate of 7.1 percent. In February, the inflation rate was 8.5 percent.
The decline in the headline inflation rate is being driven by energy prices, which fell by 0.9 percent. It is noticeable here that prices in the same month of March 2022 had already risen to a much higher level as a result of the Russian war of aggression against Ukraine.
The prices for food, alcohol and tobacco rose again significantly by 15.4 percent. Services increased in price by 5.0 percent.
Monetary watchdogs are particularly worried about core inflation, which excludes the volatile prices for energy and food. Core inflation was 5.7 percent in March, down from 5.6 percent in February. It is again at a record level, confirming its rising trend. Stubborn core inflation is causing “some headaches for central bankers,” European Central Bank (ECB) governor Isabel Schnabel said this week.
“The underlying inflation is very high, with no lasting relief in sight,” commented Jörg Krämer, Chief Economist at Commerzbank, on the new data. “Inflation is becoming more entrenched and the ECB is right to be worried.”
The ECB is aiming for an overall inflation rate of 2.0 percent. It is still a long way from this level. The central bank has therefore raised interest rates six times in a row – despite the turbulence in the financial sector at the last meeting in March. The key interest rate in the euro area is now 3.5 percent.
More: Inflation in Germany falls significantly in March, but less than expected