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Euro Area Annual Inflation Soars to 2.6 Percent in March
(MENAFN) Inflation across the euro area accelerated sharply to 2.6% in March, topping preliminary forecasts as a dramatic monthly surge in energy prices laid bare the deepening economic fallout from the ongoing Middle East conflict, official data showed Thursday.
Figures released by Eurostat surpassed earlier projections that had pegged consumer price growth at 2.5% for the month, signaling that fuel and utility costs are hitting household budgets harder than initially anticipated.
Energy prices across the 21-nation euro area rocketed 7% on a monthly basis in March — a dramatic reversal from the annual declines recorded in preceding months. On a yearly basis, energy costs climbed 5.1%, a stark contrast to the 3.1% annual drop registered just one month earlier in February.
The headline annual inflation rate jumped from 1.9% in February to 2.6% in March, with monthly consumer prices rising 1.3%. Across the broader EU, annual inflation climbed to 2.8%, up from 2.1% the prior month.
Breaking down the contributors, energy accounted for 0.48 percentage points of the euro area's annual inflation rate in March — ranking second only to services, which drove 1.49 points. Food, alcohol, and tobacco added 0.45 points, while non-energy industrial goods contributed a modest 0.13 points.
Stripping out energy entirely, annual inflation stood at 2.3% — comfortably below the headline figure, underscoring just how decisively the latest fuel shock is distorting the overall price picture.
Among the bloc's largest economies, inflation diverged considerably: Germany recorded 2.8%, France came in at 2%, Italy registered 1.6%, and Spain led the pack at 3.4%.
The data arrives against the backdrop of a severe energy supply disruption triggered by the Iran war, which has choked flows through the Strait of Hormuz — a critical conduit for global crude oil and liquefied natural gas trade. Brent crude initially surged toward $120 a barrel following the waterway's closure before retreating to around $100, though persistent shipping restrictions have kept supply anxieties elevated even amid a fragile ceasefire.
Figures released by Eurostat surpassed earlier projections that had pegged consumer price growth at 2.5% for the month, signaling that fuel and utility costs are hitting household budgets harder than initially anticipated.
Energy prices across the 21-nation euro area rocketed 7% on a monthly basis in March — a dramatic reversal from the annual declines recorded in preceding months. On a yearly basis, energy costs climbed 5.1%, a stark contrast to the 3.1% annual drop registered just one month earlier in February.
The headline annual inflation rate jumped from 1.9% in February to 2.6% in March, with monthly consumer prices rising 1.3%. Across the broader EU, annual inflation climbed to 2.8%, up from 2.1% the prior month.
Breaking down the contributors, energy accounted for 0.48 percentage points of the euro area's annual inflation rate in March — ranking second only to services, which drove 1.49 points. Food, alcohol, and tobacco added 0.45 points, while non-energy industrial goods contributed a modest 0.13 points.
Stripping out energy entirely, annual inflation stood at 2.3% — comfortably below the headline figure, underscoring just how decisively the latest fuel shock is distorting the overall price picture.
Among the bloc's largest economies, inflation diverged considerably: Germany recorded 2.8%, France came in at 2%, Italy registered 1.6%, and Spain led the pack at 3.4%.
The data arrives against the backdrop of a severe energy supply disruption triggered by the Iran war, which has choked flows through the Strait of Hormuz — a critical conduit for global crude oil and liquefied natural gas trade. Brent crude initially surged toward $120 a barrel following the waterway's closure before retreating to around $100, though persistent shipping restrictions have kept supply anxieties elevated even amid a fragile ceasefire.
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