Eurozone Inflation Hits 2.6 Percent, Energy Prices as Main Support

JAKARTA - Inflation in the euro area rose higher than expected in March. This increase was mainly driven by a surge in energy prices.

According to a report by Anadolu Agency, Thursday, July 16, citing Eurostat data, annual inflation in the 21 euro-using countries rose to 2.6 percent in March, from 1.9 percent in February. This figure also exceeded the initial estimate of 2.5 percent.

Eurostat is the official statistical agency of the European Union that collects and releases economic data from its member countries.

The data showed energy prices jumped 7 percent on a monthly basis in March. On an annual basis, energy prices rose 5.1 percent, reversing a 3.1 percent fall in February.

On a monthly basis, consumer prices in the eurozone rose 1.3 percent. Across the EU, annual inflation also increased to 2.8 percent from 2.1 percent the previous month.

Energy contributed 0.48 percentage points to eurozone annual inflation in March. The largest contribution still came from the services sector at 1.49 points. Meanwhile, food, alcohol, and tobacco contributed 0.45 points, and non-energy industrial goods 0.13 points.

If energy components are excluded, annual eurozone inflation in March was at 2.3 percent. This figure is lower than core inflation, indicating the large role of rising energy costs in the overall price surge.

Among the eurozone's major economies, inflation in March was recorded at 2.8 percent in Germany, 2 percent in France, 1.6 percent in Italy, and 3.4 percent in Spain.

The increase comes amid global energy supply disruptions after the Iran conflict affected trade flows through the Strait of Hormuz, an important route for the distribution of crude oil and liquefied natural gas (LNG).

Brent crude prices briefly approached $120 a barrel after the pipeline was disrupted, before settling around $100. But ongoing shipping restrictions have kept supply concerns high despite the ceasefire.