Eurostat released inflation data for the Eurozone, showing a slight easing in consumer prices in March on a year-on-year basis. The decline in the headline number was marginal, which may give some relief to the European Central Bank as it is trying to fend off deflation in the euro area with its quantitative easing program. The ECB recently launched a bond buying program of 1.1 trillion euros that is expected to last until September 2016.
The annual rate of inflation in the Eurozone remained negative and rose to minus 0.1%. However this was in line with expectations and was better than February’s minus 0.3%. This was a flash reading of CPI and was the fourth consecutive reading below zero.
Meanwhile, core inflation, which excludes the volatile components of energy and unprocessed food costs, came in at 0.6% year-on-year, lower than February’s 0.7%.
There wasn’t much impact to the euro after the data, possibly because there is a belief that there is a bottoming out of price falls since the decline was small and so prices could start rising again soon. Some analysts cited that as oil prices begin to rise again this will help inflation rise too.
A separate report showed unemployment in the Eurozone declined to 11.3% in February from a revised 11.4% the previous month. This was the lowest rate since May 2012 and was seasonally adjusted.
The euro traded to a low of 1.0712 soon after the data before moving higher towards 1.0730 one hour after the release of the data at 09:00 GMT.