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Rate Cut Coming? Euro Zone Inflation Falls

Peter Weber | Getty Images

The rate of consumer price inflation in the 17 countries using the euro fell to an annual rate of 1.7 percent in March, according to a first estimate from the EU's statistics agency Eurostat on Wednesday.

The inflation figure was in line with expectations, with 40 economists polled by Reuters expecting an average estimate of 1.7 percent, and was down slightly from the 1.8 percent inflation rate in February.

Prices in food, alcohol, and tobacco posted the highest rate of inflation at an estimated 2.7 percent, the same as the previous month.

Three years of crisis have fueled a recession in Europe, lessening pressures that drive price inflation such as the demand for energy and wage increases.

The fall to 1.7 percent means the inflation figure remains below the European Central Bank's target of close to, but not above, 2 percent, and could provide a rationale for an interest rate cut when central bankers meet on Thursday.

Eurostat's flash estimate for the month does not include a monthly calculation.


Contact Europe: Economy

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