Energy prices fell by 0.9% in March compared to February

20 countries that are part of the Eurozone recorded a slowdown in inflation rates amid lower energy prices. This is evidenced by preliminary Eurostat data, informs Deutsche Welle.

Inflation in March 2023 slowed down to 6.9% on an annual basis. In February, it was 8.5%. Inflation in the Eurozone reached a historical maximum of 10.6% in October 2022.

The lowest rates of inflation, according to Eurostat, recorded in Luxembourg (3%), Spain (3.1%) and the Netherlands (4.5%). In Germany it was 7.8%, in France – 6.6%, and in Italy – 8.2%.

At the same time, core inflation, which excludes energy and food costs, reached another record high. In March 2023, it was 5.7% compared to 5.6% in February. Energy prices fell by 0.9% m/m, sharply changing direction after growing to double-digit figures in 2022.

Investors are currently focusing on inflation figures to gauge central banks’ next moves, as rising interest rates could hurt the banking sector. Bloomberg and the financial company FactSet predicted that the inflation rate in the Eurozone would reach 7.1% in March.

The European Central Bank (ECB) has repeatedly raised interest rates to curb inflation, but the next steps are still unclear after the turmoil in the banking sector.

According to Burt Colein, senior Eurozone economist at financial group ING, the potential for core inflation to remain more resilient than expected will be the main reason for the ECB to raise interest rates in the near term. It is predicted that the rate will increase in May and June 2023.

As GMK Center reported earlier, the rate of inflation in the Eurozone in February 2023 constituted 8.5% annually. Energy price growth in the Eurozone slowed to 13.7% in February from 18.9% in January. The situation caused by the Russian invasion of Ukraine was eased by a mild winter on the continent, and it was predicted that the effect would become more noticeable in March 2023.