Eurozone inflation March 2024 | Top Vip News

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The core inflation rate, excluding energy, food, alcohol and tobacco, cooled from 3.1% to 2.9%, also below expectations.

However, inflation in services (a key monitoring factor for the European Central Bank) remained stuck at 4% for the fifth consecutive month, pointing to continued pressure on wage growth.

Another ECB indicator published on Wednesday, the euro area unemployment rate, stood at 6.5% in February, stable compared to January but below 6.6% in February 2023.

The price rises by France and Spain was lower than expected last week. On Tuesday, general inflation in the bloc’s largest economy, Germanywas estimated at a three-year low of 2.2%.

Markets expect the euro zone central bank to begin reducing borrowing costs in June, a position reflected in recent messages from ECB officials. They will next hold a monetary policy meeting on April 11.

Even Austrian central bank chief Robert Holzmann, an ECB hawk who previously said no cuts in 2024 were possible, told Reuters this week that he had “no objection in principle to the easing in June”.

“The current narrative clearly points to a first rate cut in June,” Carsten Brzeski, global head of macro at ING, said in a note on Wednesday. This is due to the March inflation figure, as well as data on wage growth and ECB staff forecasts for gross domestic product and inflation to be published by then, he said.

Kamil Kovar, senior economist at Moody’s Analytics, said Wednesday’s release “shed cold water on the idea that the last stretch to beating inflation will be the hardest,” and reiterated a call for five rate cuts this year.

“Inflation has fallen despite a rise in energy inflation and the boost of an early Easter. Even if the overall good numbers masked some less favorable details, such as the rise in services as food prices fell, the Overall inflation is still on track to fall below 2% at some point over the summer,” Kovar said.

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