A man pushes a shopping cart where he shopes and walks in front of a canned vegetable aisle with the “Down Price” label at Ouchan supermarket in Gilhandgrange, France on March 8, 2025.
Nicholas Gainette | AFP | Getty Images
According to Flash data from Statistics Agency EuroStat issued on Tuesday, annual eurozone inflation was soaked at 2.2% in March.
Tuesday’s print is just below the 2.3% final reading in February.
The so-called core inflation has been lowered from 2.6% in February to 2.4% in March, excluding prices for more volatile foods, energy, alcohol and tobacco. The closely monitored service inflation print, which has long been sticky at the 4% mark, also fell from 3.7% the previous month to 3.4% in March.
Recent preliminary data showed lower inflation in March than forecasts for some major eurozone economies. Inflation last month reached 2.3% in Germany and fell to 2.2% in Spain, but remained unchanged at 0.9% in France.
ECB decision
The numbers harmonizing for comparability across the Euro area raised expectations for an additional 25 base interest rate cuts from the European Central Bank during a future meeting to be held on April 17th. The market is likely to be cut by around 80% after the release of Eurozone inflation data on Tuesday, according to LSEG data.
The easing of service inflation has increased the ECB’s potential for interest rate cuts, particularly the deputy prime minister of Capital Economics, deputy prime minister of Eurozone Economics, said on Tuesday.
“This decline, along with strong evidence that it will drop even further…and a continuing decline in the latest activity survey, I think it’s enough to encourage the ECB to increase again by 25bp later this month,” he pointed out.
Separately, on Tuesday, data also showed that seasonally adjusted unemployment rate in the Euro region reached 6.1% in February, continuing its recent downward trend. The economists voted by Reuters expected that they had not changed at 6.2%.
Unemployment rates usually fall in low interest rate environments. This is because businesses can increase their labour expenditures amid the low-cost borrowing costs. Sine ECB, which began cutting interest rates last June, reduced its deposit facility fees from 4% to 2.5%.
Tariff uncertainty
The European Union is expected to be slapped later this week with valid tariffs from Donald Trump’s US administration, including a 25% collection on imported cars.
The exact impact of tariffs and retaliation measures remains uncertain, but many economists have warned for months that the effect could be inflation.
The exact impact of tariff policies from the US and its trading partners on inflation is still largely unknown, according to Bert Colijn, chief Dutch economist at ING, who also said Deflation was an option.
“US tariffs could curb exports in the eurozone market and therefore create deflationary pressures as it grows,” he said, adding that it could lead to an increase in the supply of goods in the eurozone market.
The European Union’s response could be important in shaping the economic impact of tariff disputes, Colijn explained.
“The retaliation measures from the European Commission are likely to have an upward impact on eurozone inflation, as they are essentially domestic taxes that are paid to some extent by consumers,” he said.
