Eurozone Inflation March 2020


Eurozone: Inflation slumps in March as coronavirus hits energy prices

April 1, 2020

Harmonized inflation fell to 0.7% in March from February’s 1.2%, according to a flash estimate released by Eurostat on 31 March. Inflation thus moved further below the European Central Bank’s target rate of near, but under, 2.0%. March’s drop was mainly due to a much sharper fall in energy prices prompted by coronavirus containment measures, and to a lesser extent to a slower services price increase. On the other hand, prices for food, alcohol and tobacco rose at a faster clip than in February.

On a monthly basis, harmonized prices are expected to have climbed 0.5% in March, following February’s 0.2% uptick. Core inflation, which excludes volatile energy and unprocessed foods prices, inched down from 1.2% in February to 1.0% in the third month of 2020.

Commenting on the release, Bert Colijn, Eurozone senior economist at ING, stated:

“Looking through those shaky April numbers, some stockpiling and supply chain disrupted activities and you will see that this crisis is deflationary. Businesses have lowered their selling price expectations for both goods and services dramatically in March and service sector inflation has already dropped a bit. For the ECB, this makes life easier. All signs point towards an expansionary policy for the moment.”

A complete set of data for harmonized inflation will be released on 17 April.

FocusEconomics Consensus Forecast participants see inflation averaging 0.6% in 2020, before picking up to 1.2% in 2021.

Author: Massimo Bassetti, Economist

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