Inflation in the 20 countries that use the euro slowed to its lowest level in a year as energy prices fell but food costs still rose, keeping pressure on the European Central Bank to raise interest rates further.
Consumer prices in the euro area rose by 6.9% in March 2023 from a year earlier, down from 8.5 percent in February, according to data released Friday by the EU’s statistics agency Eurostat.
Inflation in eurozone has eased since peaking at 10.6% in October, and the latest figure was slightly below what most economists had expected. This reflected significant declines in some of the continent’s larger economies such as Spain and the Netherlands, where inflation halved in March.
Economists looked beyond the headline numbers to focus on so-called core inflation, which rose to a record 5.7 percent from 5.6 percent the previous month. Core inflation, which excludes volatile food and energy prices, can give a better idea of whether inflation is taking root in the economy over the long term.
“The potential for core inflation to remain more stable than expected will be the main reason for the ECB to continue raising interest rates in the near term,” said ING Bank’s senior eurozone economist Bert Collin.