Inflation in the euro zone slows like never before, but remains high

First modification: 03/31/2023 – 19:24

Never before since the Eurozone statistics office records began has inflation slowed by 1.6 points from one month to the next, as in March 2023. However, it is not an improvement that necessarily reflects better economic behavior.

The prices of the family basket, which at the beginning of 2022 were already affected by a crisis in the supply chain, shot up even more due to the war in Ukraine and its consequent distortion in the oil market, which brought energy to prices never seen before.

In February of this year, this item had an annual increase of 13.7%, while in March it registered a negative rate of 0.9%. The reason for the sudden change in the trend responds more to the measurement method than to an improvement itself. In February 2022, the price of energy was much lower than a month later, when the full effect of the war was felt.

Energy products, however, have been declining in the 20 European countries with a common currency. The interannual inflation of this item stood at 41.5% in October, 34.9% in November, 25.5% in December and 18.9% in January.

The inflation data for March looks clearly desirable, considering that it was close to double digits at the worst moment in 2022, although economists are looking further afield to focus on so-called core inflation, which rose to a record 5 .7% from 5.6% the previous month.

Core inflation, which excludes volatile food and energy prices, can give a better idea of ​​whether inflation is taking root in the economy over the long term or is transitory.

With EFE, Reuters and AP