Inflationary Pressures Easing as Annual inflation Falls in Eurozone in March

Highlights

• Inflation drops in most EU states
• Food, alcohol & tobacco top contributors to inflation
• Hungary records highest inflation rate in EU

Overview

According to recent data published by Eurostat, the statistical office of the European Union, the annual inflation rate in the euro area decreased from 8.5% in February 2023 to 6.9% in March.

Similarly, the European Union’s annual inflation rate decreased from 9.9% in February to 8.3% in March. This drop in inflation rates may provide some relief to policymakers who have been grappling with rising inflationary pressures.

Among the Member States, Luxembourg recorded the lowest annual rate of inflation at 2.9%, followed by Spain at 3.1% and the Netherlands at 4.5%. On the other hand,

Hungary registered the highest annual inflation rate at 25.6%, followed by Latvia at 17.2% and Czechia at 16.5%. Compared to February, annual inflation fell in twenty-five Member States and rose in two.

In March, the largest contributions to the annual euro area inflation rate came from food, alcohol & tobacco, which contributed 3.12 percentage points, followed by services contributing 2.10 percentage points, non-energy industrial goods contributing 1.71 percentage points, and energy contributing a small negative contribution of -0.05 percentage points.

Overall, these figures suggest that inflationary pressures are easing in the euro area and the European Union.

However, policymakers will continue to monitor the situation closely to ensure that inflation remains under control and does not hinder the economic recovery from the pandemic.

For a look at all of today’s economic events, check out our economic calendar.