Eurozone inflation eases further as US trade tariff threat looms

Inflation in the single currency area reached 2.2 per cent, calmed by an easing of energy tariffs and prices In the services sector, the EU’s Eurostat statistics agency said

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Inflation in the eurozone slowed further in March, official data showed on Tuesday, indicating possible breathing room for policymakers despite the threat of turbulence from US trade tariffs.

Inflation in the single currency area reached 2.2 per cent, calmed by an easing of energy tariffs and prices in the services sector, the EU's Eurostat statistics agency said.

That was down slightly from the 2.3 per cent figure for February, bringing the rate closer to the European Central Bank's two-percent target.

Inflation has gradually eased since a peak in October 2022 following Russia's invasion of Ukraine, which sent energy prices soaring.

The European Central Bank has pivoted from hiking interest rates to tackle inflation, to lowering them to boost the eurozone's floundering economy.

Last month it lowered its benchmark deposit rate by a quarter of a percentage point to 3.75 per cent, but its head Christine Lagarde warned of risks from US tariff threats and massive German spending plans.

In March, inflation in prices for services eased to 3.4 per cent from 3.7 per cent in February, Eurostat said.

In energy, the rate was negative 0.7 per cent, from 0.2 per cent the month before. Food-price inflation accelerated slightly, however.

The key measure of underlying inflation — inflation excluding the volatile energy and food prices — also eased, from 2.6 to 2.4 per cent.