Annual inflation in the eurozone fell to 2.2%

Eurostat has published its preliminary estimate of annual inflation in the euro area for March 2025: the consumer price index stood at 2.2% year-on-year, down 0.1 percentage points from February's level. Although the slowdown is modest, it indicates a gradual reduction in inflationary pressures in the region.

The services sector was again the main source of inflation, showing a price increase of 3.4 per cent compared to 3.7 per cent in February. This is probably due to the increase in prices for housing, transport, medicine and leisure, which makes services the most stable component of the consumer basket.

Prices for foodstuffs, alcohol and tobacco also increased - the growth was 2.9% in March (against 2.7% in February). The jump was particularly noticeable for unprocessed food products, whose prices rose by 4.1 per cent at once. This may be due to seasonal fluctuations, crop failure or logistical failures.

Energy prices declined by 0.7%, indicating the volatility of this segment, especially after a sharp increase in January (+1.9%). This is a key factor in slowing overall inflation, as energy has historically been a strong inflation trigger in recent years.

In Luxembourg, inflation slowed to 1.5 per cent in March, down from 1.9 per cent in February, recording even a slight decrease compared to the previous month (-0.1 per cent).

Despite the decline in inflation, core inflation - which excludes energy and products - remains at 2.4 per cent, pointing to domestic inflationary pressures in the eurozone economy. The European Central Bank will monitor the sustainability of the trend before adjusting interest rates.

The full report and next publication is expected on 16 April 2025, with a more detailed breakdown by country and sector.