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(Reuters) – Euro zone inflation slowed more than expected in March, according to preliminary data published on Wednesday by Eurostat, which will encourage the European Central Bank (ECB) to position itself for a rate cut in June.
The consumer price index calculated according to European standards (HICP) increased by 2.4% year-on-year last month in the 20 countries sharing the European currency, after 2.6% in February.
The Reuters consensus expected an increase of 2.6%.
Excluding the most volatile items such as unprocessed food products and energy, inflation slowed to 3.1% in March after 3.3% the previous month, and a consensus of 3.2%.
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A narrower measure of price rises, which excludes food, energy, alcohol and tobacco, fell to 2.9% from 3.1% in February.
The consensus was expecting an increase of 3.0%.
These figures constitute good news for the ECB as a consensus begins to emerge within the Governing Council on a first rate cut in June.
The governor of the Austrian central bank, Robert Holzmann – considered a “hawk” – declared on Wednesday that he was in favor of easing in June.
In fact, fears that the “last mile” of inflation will prove more difficult to cover seem unfounded, while services inflation remains high at 4%, according to Wednesday’s figures.
The next ECB meeting will be held on April 11, and the markets will be attentive to the evolution of the central bank’s speech.
In January, Christine Lagarde, the president of the institution, declared herself “confident” but “not sufficiently confident” in the return of inflation to its target of 2%.
“Overall, next week’s meeting will be the prelude to a new turning point in the euro zone’s monetary policy: the last step before the decline,” comment ING strategists.
(Written by Corentin Chappron, edited by Blandine Hénault)
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