The good news is that inflation in the Eurozone is falling. The bad news is that the core rate continues to climb. Overall, prices in the eurozone increased by only 6.9 per cent in March 2023, down from 8.5 per cent in February. This is mainly due to base effects, as energy prices exploded in March 2022. In contrast, the main price drivers did not change in March.

The upward trend in food prices intensified. They climbed 15.4 per cent in March from 15.0 per cent in February. And the core rate rose from 5.6 per cent in February to 5.7 per cent in March 2023, with companies still able to push through higher prices, and increasingly so in the services sector. We expect inflation rates to drop further in the coming months. However, this does not apply to the core rate, which we believe has not yet peaked. Added to this are higher wage settlements and an increasingly tight labour market. The European Central Bank is likely to respond to this with further interest rate hikes.