Investing.com -- Euro zone inflation experienced a slight decrease last month, according to data provided by Eurostat on Tuesday, aligning with predictions and may influence the European Central Bank (ECB) to implement another interest rate cut later in April.
Consumer price growth across the 20 nations using the euro fell to 2.2% in March from 2.3% in February. This drop is attributed to a significant decrease in energy costs and a slowdown in service inflation, according to the data.
According to analysts at Capital Economics, March’s big decline in euro-zone services inflation strengthens the case for the ECB to cut interest rates at the meeting on April 17.
A core figure that excludes the unpredictable food and fuel prices also fell to 2.4% from 2.6%, which was under the predicted 2.5%. This decrease is likely to alleviate the ECB, which has been concerned about persistent underlying price growth.
Supporting predictions of rate cuts, price growth in services decreased to 3.4% from 3.7%, as many policymakers had anticipated.
"We think this decline, together with strong evidence that it will fall further and continued weakness in the latest activity surveys, will be enough to prompt the ECB to cut interest rates by 25bp again later this month," according to Capital Economics.
However, food price inflation has continued to rise, driven by a 4.1% increase in the cost of unprocessed foods.
Last month, the ECB announced that it expects inflation to remain near the current level for the rest of the year before dropping to its 2% target at the beginning of 2026.
