Euro zone inflation smashes through ECB target to 2.5%
French cheeses are on display in a store in Paris.
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Inflation in the euro zone jumped to 2.5% in March, according to the latest preliminary figures released by Eurostat on Tuesday.
Eurozone inflation rose from 1.9% in February and is well above the European Central Bank’s 2% target.
This increase largely reflects the sharp rise in energy prices since the United States and Israel launched military operations against Iran at the end of February. Economists surveyed by Reuters had expected this rate to be 2.6%.
Eurostat said the energy component of inflation data was expected to rise to 4.9% in March, compared to -3.1% in February. Inflation was also driven by services (3.2% compared to 3.4% in February) and food, alcohol and tobacco (2.4% compared to 2.5% last month).
European Central Bank President Christine Lagarde said last week that the central bank is closely monitoring regional data and will respond with an interest rate hike if necessary, even if the rise in inflation turns out to be short-lived.
The central bank has already revised its medium-term growth and inflation forecasts and now expects economic growth to be 0.9% in 2026, with headline inflation to average 2.6% for the year.
Inflation pressure is the latest evidence of the impending downturn for the euro zone, where economic sentiment, consumer confidence, employment prospects and private sector output growth have all been hit by the outbreak of the Iran war; Europe sees this conflict as a US-led war of choice rather than necessity.
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