FRANKFURT — Eurozone inflation dropped at a record rate to 6.9 percent in March, driven by a sharp decline in energy prices compared to the same month last year, data released by the European statistics agencies showed today.
While welcome news, the numbers will not have the European Central Bank in Frankfurt popping Champagne corks as they also showed so-called core inflation continued to rise. Core inflation measures filter out volatile food and energy components and are seen as a bellwether for future inflation trends.
In March, core inflation accelerated to a record 7.5 percent, up from 7.4 percent in February.
The ECB has raised interest rates at the fastest pace on record by a cumulative 3.5 percent since last summer, but has refrained from giving any specific policy guidance for its May meeting.
A continued rise in underlying price pressures – already at more than three times the ECB’s 2 percent target – will keep up pressure on the ECB to raise rates further.
