Annual inflation in the Euro Area eased to 2.2% in March 2025, marking the lowest rate since November 2024 and coming in slightly below market expectations of 2.3%, according to a preliminary estimate.
Eurozone inflation rate slows to four-month low
This moderation in price growth was driven by a slowdown in services inflation, which declined to 3.4% from 3.7% in February, as well as a drop in energy costs, which fell 0.7% year-on-year, reversing the 0.2% increase recorded in the previous month.
However, certain components of inflation remained resilient. Prices for non-energy industrial goods held steady at 0.6%, while processed food, alcohol, and tobacco maintained their 2.6% increase. Notably, unprocessed food prices surged to 4.1% from 3.0%, highlighting persistent pressures in the food sector.
Core inflation also slows
Meanwhile, core inflation, which excludes volatile food and energy prices, declined to 2.4%, slightly below market forecasts of 2.5%, reaching its lowest level since January 2022. This drop in core inflation suggests easing underlying price pressures, potentially influencing the European Central Bank's monetary policy stance in the coming months.
On a monthly basis, consumer prices increased 0.6% in March, accelerating from 0.4% in February, indicating that while overall inflationary pressures are diminishing, some volatility in price movements remains.
