Eurozone Inflation March 2016


Eurozone: Eurozone consumer prices linger in negative territory in March

March 31, 2016

Consumer prices in March lingered in negative territory for a second consecutive month, despite efforts by the European Central Bank to spur inflation. According to a flash estimate released by Eurostat on 31 March, harmonized consumer prices—measured by the harmonized index of consumer prices—fell 0.1% in March. The result followed February’s 0.2% decline and was in line with market analysts’ expectations.

According to Eurostat, the main contributor to March’s negative reading was energy prices, while prices rose for services as well as for food, alcohol and tobacco. Core inflation rose to 1.0% from February’s 0.7%, which had marked the lowest level since April 2015. However, the rise may be attributed to the early timing of Easter, which likely spurred price pressures in leisure areas. Month-on-month price variations and a more detailed set of data will be provided on 14 April.

Meanwhile, more complete data showed that harmonized consumer prices rose 0.2% in February over the previous month, which contrasted the 1.5% decline observed in January. Revised data confirm that harmonized consumer prices fell 0.2% annually in February, bringing annual average inflation to 0.1%.

Looking at the countries in the common-currency bloc, 13 of the 19 Eurozone economies showed inflation rates equal to or above the regional average. Belgium (1.1%), Austria (1.0%) and Malta (1.0%) were the economies with the highest rates. In contrast, Cyprus (-2.2%), Spain (-1.0%) and Slovenia (-0.9%) were the economies that registered the largest annual declines in HICP consumer prices.

Among the largest economies in the Eurozone, consumer prices declined annually in France, Germany, Italy and Spain.

FocusEconomics Consensus Forecast participants see inflation in the Euro area averaging 0.4% in 2016, which is down 0.1 percentage points from last month’s forecast. For 2017, panelists expect inflation to average 1.4%.

Author: Angela Bouzanis, Lead Economist

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Eurozone Inflation Chart

Euro Inflation by country February 2016

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

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