MNI Eurozone Inflation Preview – March 2025

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EXECUTIVE SUMMARY:

• The Eurozone March flash inflation round is spread across two weeks, with the Eurozone-wide print coming in next Tuesday, April 1. Analyst forecasts compiled by MNI point to headline around 2.2% Y/Y and core around 2.5% Y/Y.
• The upcoming April 17 ECB decision is the most uncertain since last October. The step change in the Eurozone (particularly German) fiscal outlook has added a medium-term upside risk to inflation, while US tariff policy remains a considerable source of uncertainty. Meanwhile, the March ECB policy statement described policy as “meaningfully less restrictive”, an early sign that the pace of easing may start to slow in the coming months.
• Despite this, markets continue to tilt in favour of a 25bp April cut (ECB-dated OIS assign a ~70% implied probability of this outcome), with the March flash PMIs signalling a deterioration in services sentiment and a number of ECB speakers providing dovish leaning comments.
• This sets the scene for an important flash inflation round in March. Expectations are for services disinflation to continue after February’s pullback to 3.7% Y/Y, and a realisation of such a dynamic would provide further support to an April cut. Services inflation is expected to ease on a combination of base effects (due to this year’s Easter holiday timing) and a weaker underlying momentum. We see sell side analysts expectations to centre around 3.5% Y/Y for the category – which would be the lowest rate since June 2022.