The CPI in the euro zone cooled rapidly in March, but the core CPI hit a new high.
[Financial Channel/Comprehensive Report] According to the data, the consumer price index (CPI) in the euro zone dropped sharply to 6.9% in March after an annual increase of 8.5% in February, the largest since Eurostat collected the data in 1991 However, the core CPI increased by 0.1% to 5.7%.
The main reason for the 1.6 percentage point CPI drop in the Eurozone in February was the decline in energy costs. In addition, Russia invaded Ukraine at the end of February last year, and energy prices subsequently rose. Under the influence of the high base period, the annual growth rate will also moderate.
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However, the core CPI, which excludes volatile energy, food, alcohol and tobacco prices, rose slightly from the previous month, rising to a record high of 5.7 percent from 5.6 percent in February, with food prices contributing the most to the inflation figure.
Jack Allen-Reynolds, euro zone economist at Capital Economics, said: "ECB policymakers will not read too much into the decline in headline inflation in March, but are more concerned about core inflation hitting a record high."
Officials including the ECB's chief economist, Philip Lane, said another rate hike would likely be necessary to bring inflation back to its 2 percent target as the financial turmoil recedes.
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