Inflation has slid again in Europe. What that means for interest rates
The inflation that has squeezed European shoppers fell more than expected in March to 2.4%, as cost spikes in the grocery aisle eased and overall price rises headed down in the two biggest economies, Germany and France.
The annual figure for the 20 countries that use the euro currency came in below the 2.5% predicted by financial markets and brings the European Central Bank ever closer to its inflation goal of 2%.
But analysts say the decline from 2.6% in February, though welcome, would likely not be enough to move up the ECB’s first interest rate cut.
The bank meets April 11 but the first reduction in borrowing costs is not expected until June despite an economy that’s failing to grow, several analysts said.
Food inflation fell to 2.7% from 3.9%, and energy prices dropped by 1.8%, according to numbers released yesterday from Eurostat, the European Union’s statistics agency. Meanwhile, core inflation, which excludes volatile food and energy costs, eased to 2.9% from 3.1% in February.
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