Europe | March inflation supports the ECB

There is good news for the European Central Bank (ECB) thanks to the clear reduction of inflationary pressures, led by the slowdown in the prices of industrial goods, energy and food — and, to a lesser extent, by services, which still show a very persistent behavior.

Key points

• Key points:
• Preliminary eurozone inflation data for March continued along these lines, with the year-on-year rate easing to 2.4%, two tenths of a percentage point lower than in February.
• If we exclude the most volatile components, such as energy and food, it also results in an easing of two tenths of a percentage point from the previous month, at 2.9% in March, even more so in view of the expected upturn in activity in the services sector during Easter.
• In contrast, the slowdown in the price of services has been much less pronounced, and the growth rates are still high; in many cases, this situation reflects a still resilient labor market and strong demand.
• The moderation of inflation in services is key for the ECB to feel fully confident to kick-start interest rate cuts at the June meeting. However, recent inflation figures are already allowing the focus of discussions to turn to the weakness of economic activity.

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