Eurozone inflation recovered a little in March, but is still struggling below zero, with prices shrinking 0.1% year-on-year, meeting the forecasts of economists, and up from a fall of 0.2% in February’s figures, according to the latest flash data released by Eurostat.
That number means that prices are still falling, and are a very long way from the European Central Bank’s 2% target.
Year-on-year core consumer prices met the forecasts of economists, gaining 1%.
Core prices are an important measure because they strip out the most volatile items — things like fuel and food prices which are subject to massive variations.
Eurostat’s latest figures are only a flash reading, so could easily be revised upwards or downwards, but they give a pretty good indication of how the eurozone economy performed in March.
The eurozone has been flirting with price deflation for the past year or so, largely hovering just above zero since early 2015. Here’s how inflation in the eurozone looked across various sectors in March:
As the chart shows large part of the eurozone’s extremely low inflation right now is down to a slump in the energy sector, largely caused by a crash in the price of oil over the last year — and the core figure shows that other prices aren’t rising by as much as the ECB would like, either.
Here’s what Eurostat had to say:
Looking at the main components of euro area inflation, services is expected to have the highest annual rate in March (1.3%, compared with 0.9% in February), followed by food, alcohol & tobacco (0.7%, compared with 0.6% in February), non-energy industrial goods (0.5% compared with 0.7% in February) and energy (-8.7%, compared with -8.1% in February).
The CPI figures come just a few weeks after the European Central Bank and its president Mario Draghi announced a series of new monetary policy measures, including cutting all its base rates, and extending its programme of bond buying.
The measures are designed to try and boost stalling inflation, as well as growth, within the Eurozone. So far the ECB’s negative interest rate policy (NIRP) has failed to serve its purpose effectively, and despite a little rise, today’s CPI data won’t exactly fill Draghi and the rest of the ECB with confidence.