Eurozone inflation unexpectedly eases, core rate drops to two-year low

Inflation in the eurozone unexpectedly slowed in March, with the core rate dropping to its lowest in more than two years, as price pressures in the single-currency region continue to ease.

The year-on-year change in the eurozone's harmonised consumer price index fell to 2.4% last month, from 2.6% in February, according to Eurostat, surprising economists who had pencilled in no change.

This was the same rate recorded in November 2023, which was the lowest level seen since July 2021.

The core rate – which excludes volatile items like food and energy – also slowed, to 2.9% from 3.1%, under expectations of 3.0% and the lowest reading since February 2022.

In other news, the unemployment rate for the eurozone came in at 6.5% for February, holding steady after January's reading was revised higher from 6.4% to 6.5%. The consensus forecast was 6.4%.

Commenting on the data, analysts at Rabobank said the conditions for an interest-rate cut by the European Central Bank in June are "ripening".

"The release of the Eurozone March CPI inflation estimate at 2.4% y/y, is set to solidify market expectations of a June ECB rate cut," they said.