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Eurozone inflation eased further in March, according to official data released Tuesday, potentially giving policy makers some breathing room despite concerns about the impact of US trade tariffs. The EU's Eurostat agency reported that inflation in the single currency area slowed to 2.2 percent, driven by a moderation in energy prices and services sector costs. The rate is nearing the European Central Bank's (ECB) target of 2 percent, down from 2.3 percent in February.
Inflation has gradually eased since a peak in October 2022 following Russia's invasion of Ukraine, which sent energy prices soaring.
The European Central Bank has pivoted from hiking interest rates to tackle inflation, to lowering them to boost the eurozone's floundering economy. Last month it lowered its benchmark deposit rate by a quarter of a percentage point to 2.5 percent, but its head Christine Lagarde warned of risks from US tariff threats and massive German spending plans.
In March inflation in prices for services eased to 3.4 percent from 3.7 percent in February, Eurostat said. In energy, the rate was negative 0.7 percent, from 0.2 percent the month before. Food-price inflation accelerated slightly however.
The key measure of underlying inflation -- stripping out the effect of volatile energy and food prices -- also eased, from 2.6 to 2.4 percent. Economists warn that US President Donald Trump's announcement of sweeping trade tariffs on other countries risks driving inflation up again and curbing growth.
Trump is scheduled to unveil his latest wave of tariffs on Wednesday but has not indicated their full size or scope. He introduced 25-percent tariffs on imported steel and aluminium last month and has vowed duties of the same size on vehicles shipped to the United States from Wednesday.
NG bank economist Bert Colijn said the new inflation figures could justify a new rate reduction in spite of the high uncertainty created by the tariff threat.
