MNI Eurozone Inflation Insight – March 2025

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• While Eurozone headline HICP met expectations in March’s flash estimate, at 2.2% Y/Y, the more dovish cohort of the ECB is likely to be encouraged by the continued moderation in the year-over-year services inflation rate seen this time; its slowdown to 3.4% marks its joint slowest pace since January 2022.
• However, data including the seasonal-adjusted measures from the ECB indicate that the current pace in the category remains elevated. That could underpin the governing council’s level of weariness level after a potential April cut, which markets view as the base case for the ECB for now.
• The market reaction to the flash inflation round was mixed across key countries, with notable deviations from consensus in different countries. France surprised with a negative 0.2pp deviation (as it did last time), recording a 0.9% Y/Y headline rate, and was followed by Spain coming in at 2.5% with a -0.3pp deviation. Germany also surprised consensus to the downside, by 0.1pp at 2.3% Y/Y, but both the Netherlands and Italy came in firmer than expected (+0.1pp at 3.4% and +0.3pp at 2.1pp, respectively).