Euro area – The core rate continues to drop

Inflation will come close to the ECB target in the short term

According to preliminary data from Eurostat, the headline inflation rate fell slightly to 2.2% in March (from 2.3% in February), which was in line with the expectations of economists surveyed in advance. This brings inflation closer to the ECB target of 2.0%. The inflation rate excluding energy, food, alcohol and tobacco (core rate) fell to 2.4% (from 2.6% in February), which was slightly below expectations.

In the coming months, however, headline inflation is likely to remain at this level and thus above the ECB target of 2.0%. After a short-term breather, the core rate is likely to fall noticeably again over the summer months.

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