Eurozone CPI improves in March but remains negative

The eurozone consumer prices index improved in March but remained in negative territory at -0.1%, according a flash estimate by Eurostat that was in line with consensus forecasts.

Eurozone CPI was improved from -0.2% in February.

Core CPI, which excludes more volatile prices such as fuel and food, rose to 1.0% from 0.8% the month before and beating predictions for a rise to 0.9%.

Eurostat said this reflected a rebound in services inflation from +1.0% to +1.3%

The slight improvement will be encouraging for European Central Bank president Mario Draghi, said analyst Naeem Aslam of Avatrade, but the improvement in the data was mainly due to recovery in the oil price.

Jonathan Loynes of Capital Economics said the figures confirmed that price pressures in the currency union remain very weak, with the -0.1% headline rate looking low in light of the rise in oil prices during the month.

On the rise in core inflation he said data from individual countries suggested that this may have partly reflected the early timing of Easter raising inflation in some leisure sectors, and so the increase could be reversed in April.

"Meanwhile, non-energy goods inflation fell from +0.7% to just +0.5%, suggesting that the upward effect from the previous decline in the euro is fading," Loynes added.

"Looking ahead, euro-zone inflation is likely to remain close to zero in the next few months before edging higher in the second half of the year as negative energy effects finally fade. But it looks set to remain well below the ECB’s target of close to 2%, maintaining pressure on the central bank for yet more policy support."