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Europe’s inflation eases as energy falls but food up

Inflation in European countries using the euro dropped again to 6.9 per cent in March, while energy prices fell the cost of food continued to rise.

Europe Economy The rise in core inflation will keep the heat on the European Central Bank to keep raising rates.
April 1, 2023
1 April 2023

Inflation in the 20 countries using the euro slowed to 6.9 per cent in March – the lowest level in a year.

Food costs are still on the rise but energy prices have fallen, making a sharp turnaround after months of punishing increases.

Consumer prices in the eurozone dropped from the 8.5 per cent recorded in February, according to data released on Friday by the European Union’s statistics agency Eurostat.

Inflation has dropped to its lowest level in a year since since peaking at 10.6 per cent in October.

But prices for food, alcohol and tobacco rose by 15.4 per cent, faster than the previous month’s 15 per cent, in a sign European consumers are still being squeezed.

Energy prices, however, fell 0.9 per cent – an abrupt change of direction after rising at double-digit rates over the past year.

Russia’s war in Ukraine pushed up prices for natural gas used to heat homes and generate electricity, fuelling overall inflation, but the latest reading suggests a mild winter and European efforts to store and source gas from sources outside Russia have paid off.

So-called core inflation, which excludes volatile food and energy prices, increased slightly to 5.7 per cent from 5.6 per cent the previous month, which will keep the heat on the European Central Bank to keep raising interest rates.

However, the bank expects the decline in inflation to accelerate from the second half of the year.

AP and Reuters

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