Euro area inflation under control: March 2025 showed a slowdown in price growth

According to Eurostat, annual inflation in the euro area in March 2025 was 2.2%, while in February it was at 2.3%. By comparison, in March 2024, the figure reached 2.4 per cent. Across the European Union, annual inflation was 2.5%, down from February's 2.7%. This is a continuation of the steady downward trend in price growth seen over recent months.

The lowest inflation rates were recorded in France (0.9 per cent), Denmark (1.4 per cent) and Luxembourg (1.5 per cent). At the same time, the highest values were recorded in Romania (5.1 per cent), Hungary (4.8 per cent) and Poland (4.4 per cent). Thus, within the EU there is still a significant gap between countries in terms of inflationary pressures, indicating a deep heterogeneity of economic conditions.

Services made the main contribution to eurozone inflation, adding 1.56 percentage points to the overall index. This was followed by food, alcohol and tobacco products, which added 0.57 points. Non-energy industrial goods gave a gain of 0.16 points, while the energy sector showed a negative contribution of minus 0.10 percentage points. This reflects the general decline in energy prices, which plays a restraining role in price dynamics.

Prices of unprocessed food products started to rise again, strengthening their contribution to 0.18 percentage points from the previous 0.13. This can be attributed to seasonal factors and logistical disruptions.

In Luxembourg, inflation in March 2025 was only 1.5 per cent, making the country one of the most stable in terms of prices in the European Union. This result is due to moderate tariffs for services, stable energy prices and lower consumer demand. By comparison, a year ago, the country's inflation rate was 3.2 per cent, which shows remarkable progress in reducing price pressures.

Despite the general slowdown in inflation, the indicators are still above the European Central Bank's 2% target. However, the current dynamics brings the situation closer to the target benchmarks, and this may signal a softening of monetary policy. The next preliminary inflation estimate for April will be published on 2 May 2025.