Xinhua
01 Apr 2025

BRUSSELS, April 1 (Xinhua) -- Eurozone inflation eased in March, hinting at growing deflationary pressures as U.S. tariffs threaten to dampen exports and economic growth.

The Eurozone's annual inflation rate eased to 2.2 percent in March, down from 2.3 percent in February, according to a flash estimate released by Eurostat on Tuesday.

Among all categories, services are expected to record the highest annual inflation rate of 3.4 percent, down from 3.7 percent in the previous month.

Bert Colijn, ING's chief economist for the Netherlands, noted that while the weaker services inflation was partly influenced by a late Easter this year, the broader trend points to a more sustained slowdown. He highlighted that businesses in the service sector have reported softening selling price expectations and weakening activity in recent months.

Data showed that inflation for food, alcohol, and tobacco stood at 2.9 percent in March, lower than 2.7 percent in February. Energy prices saw a decline in annual inflation, contracting by 0.7 percent in March, a reversal from the 0.2 percent increase recorded in February. Meanwhile, inflation for non-energy industrial goods held steady at 0.6 percent.

"Uncertainty around the short-term outlook for inflation remains very high. U.S. tariffs could result in deflationary pressures on the eurozone market as they depress exports and therefore growth," Colijn said.

On the other hand, he noted that retaliatory measures from the European Commission are likely to offset deflationary pressures and push inflation higher in the eurozone, as they effectively function like a domestic tax -- costs that will partially be borne by consumers.

In March, eurozone members Estonia, Croatia, and Slovakia recorded the highest annual inflation rates at 4.3 percent. The German and French economies, the European Union's "twin engines," registered annual inflation rates of 2.3 percent and 0.9 percent, respectively.