EuroWire, LUXEMBOURG: Eurozone inflation accelerated to 2.5% in March from 1.9% in February, according to a flash estimate published by Eurostat, marking a renewed move above the European Central Bank’s 2% target after several months closer to that level. The monthly increase was 1.2%, and the March reading was driven mainly by a sharp rebound in energy costs. The estimate covers the 21 countries that now use the euro and will be followed by a fuller dataset later this month.
Energy recorded the strongest annual increase among the main components of the Harmonised Index of Consumer Prices, rising 4.9% after a 3.1% decline in February. By contrast, services inflation eased to 3.2% from 3.4%, food, alcohol and tobacco slowed to 2.4% from 2.5%, and non energy industrial goods fell to 0.5% from 0.7%. The breakdown showed that the headline increase was concentrated in energy rather than spread evenly across the main parts of the consumer basket.
Underlying price pressure remained more restrained than the headline figure suggested. Inflation excluding energy stood at 2.3% in March, down from 2.4% in February, indicating that broader consumer price growth softened even as the overall rate moved higher. That pattern left a clear split in the March figures, with an energy shock lifting the overall number while the more domestically driven categories, especially services, showed some moderation compared with the previous month.
Energy Costs Drive Headline Rise
Among the bloc’s largest economies, Germany posted annual inflation of 2.8% in March, Spain 3.3%, France 1.9% and Italy 1.5%. Elsewhere in the euro area, several smaller economies recorded higher readings, including Croatia at 4.7%, Lithuania at 4.5% and Luxembourg at 3.8%, while Malta remained at 2.3%. The wide spread in national figures underlined how the energy rebound affected countries differently, even as the aggregate eurozone measure moved decisively higher.
The March data came less than two weeks after the ECB left its three key interest rates unchanged, keeping the deposit facility rate at 2.00%, the main refinancing rate at 2.15% and the marginal lending rate at 2.40%. In its March 19 policy decision, the central bank said headline inflation was projected to average 2.6% in 2026, revised up from its December outlook, largely because higher energy prices linked to the war in the Middle East were expected to lift consumer prices this year.
ECB Outlook Remains In Focus
The ECB also projected inflation excluding energy and food at 2.3% in 2026 and said economic growth would average 0.9% this year. Those forecasts highlighted the contrast between a weaker growth backdrop and a renewed increase in price pressures from commodities. March’s flash estimate broadly matched that picture, with headline inflation rising on energy while the non energy measures were lower than a month earlier, offering a mixed signal on the strength and breadth of inflation across the currency union.
Eurostat said the next release containing the full March harmonised inflation data for the euro area, the European Union and individual member states is scheduled for April 16. Until then, the flash estimate provides the clearest snapshot of consumer prices at the end of the first quarter, showing that eurozone inflation moved back above target in March even as some underlying categories eased.