Euro Area Inflation

March inflation confirmed at lowest level in nearly five years

According to the more detailed data released by Eurostat on 16 April, the harmonized index of consumer prices (HICP) rose 0.9% over the previous month. The reading was up from the 0.3% increase recorded in February and marked the highest monthly increase since March last year.

Annual headline inflation dropped from 0.7% in February to 0.5% in March, which marks the lowest level since October 2009. The result adds to the concerns that the Eurozone may be entering into a deflationary spiral. Annual average inflation inched down from 1.2% in February to 1.1% in March.

The core inflation index, which does not include prices for energy, rose 1.2% over the previous month (February: 0.4% month-on-month). Annual core inflation fell from 1.1% in February to 0.9% in March.

At a country level, 9 of the 18 Eurozone economies posted annual inflation rates equal to or above the regional average. Austria (1.4%) and Malta (1.4%) recorded the highest annual inflation rates. At the other end of the spectrum, Cyprus and Greece experienced year-on-year decreases in harmonized consumer prices (-1.5% and -0.9% respectively). Among the major economies in the Eurozone, inflation was above the regional average in Germany (0.9%) and France (0.7%), whereas it was below average in Italy (0.3%) and Spain (-0.2%).

FocusEconomics Consensus Forecast participants see inflation in the Euro area averaging 1.1% in 2014, which is unchanged from last month's forecast. For 2015, panelists expect inflation to average 1.4%.

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Euro Area Inflation Chart

Euro Inflation March 2014

Note: Year-on-year and monthly variation of harmonized consumer price index (HICP) in %.
Source: Eurostat.

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