The eurozone’s rate of inflation fell sharply in March, as energy prices across the region continued to fall from record levels reached last summer, but prices for food remained stubbornly high.
Prices rose 6.9 percent in the year through March for the 20 countries that use the euro, down from an 8.5 percent annual pace in February, the European Union’s statistical office said on Friday. Largely driving the drop was the cost of energy, which soared last year following the invasion of Ukraine and has fallen this year as Europe has successfully pivoted away from a reliance on Russian fuels.
But the price of food rose at an annual rate of 15.4 percent, a record, compared with 15 percent in February.
And with both food and energy taken out of the mix, the so-called core rate of inflation ticked higher, to 5.7 percent, from 5.6 percent in February. That increase, which can reflect wages and the rising cost of services, is a sign of underlying inflation pressures persisting in the economy.
Economists said that because of the rapid drop in energy prices, the European Central Bank would need to focus on bringing down other prices reflected in the core rate.
“Because it was so widely known that energy inflation would drop like a stone, the bigger concerns remain around the other components,” said Bert Colijn, a senior economist with ING. “This is where a lot more work needs to be done.”
After a series of rate increases, the E.C.B. has said it will observe the situation before committing to any further rate moves. Earlier this month, it increased rates by half a percentage point. That move came despite turmoil in financial markets caused by the collapse of Silicon Valley Bank and Credit Suisse of Switzerland.