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Eurozone inflation hits three-month low as euro sees more losses

The March eurozone inflation figure decelerated to its lowest rate in three months as the euro lost further ground against the pound on Wednesday (19 April).


Kristen McGachey

The movements came as markets digested prime minister Theresa May’s snap election and mused over French politics.

After hitting its 2% inflation target in February, the price of goods declined in March, impacted by a slowdown in the prices of fuel, heating oil, vegetables and packaged holidays.

Inflation in the European Union (EU) fell by 0.4% to 1.6%, while the euro area recorded a 0.5% drop in its inflation rate.

The UK’s inflation rate, by comparison, remained fixed at 2.3% over February and March.

Inflation was highest in Latvia and Lithuania, at 3.3% and 3.2% respectively but eased up in some of the major European economies.

Germany and France saw rates fall from 2.2% to 1.5% and holding at 1.4%, respectively.

Meanwhile, over February, Eurostat data shows that euro area exports to the rest of the world increased year-on-year by 4% to €170.3bn. Imports during the same period were up 5% at €152.6bn.

However, the euro area only posted a trade surplus of €17.8bn compared with €18.2bn the year prior.

The EU’s trade surplus was also slightly weaker at €1.7bn, with imports rising faster than the region’s exports.

Sterling sprang to its highest level against the euro since September, closing at €1.1967 on Tuesday.

In April alone, it has risen 2.5% relative to the euro, buoyed by May’s general election proclamation and jitters ahead of the French election.