Germany’s inflation rate fell to 2.2% in March, down from 2.3% in February, primarily due to decreasing energy prices and a strong euro. While this decline offers some relief, analysts caution that looming US tariffs and potential trade conflicts could lead to accelerated consumer price increases. The economic outlook remains uncertain as the European Central Bank considers further rate cuts. ECB officials are reportedly still evaluating the implications of trade tensions on inflation, indicating a cautious approach moving forward.
Germany's inflation rate inched downwards in March, preliminary data showed Monday, but analysts warned that trade tensions could fuel faster consumer price rises in the near future.
Falling energy prices and a strong euro relative to the dollar contributed to the fall, said Stephanie Schoenwald, economist at public lender KfW.
ING bank analyst Carsten Brzeski said an "escalation of trade tensions and possible European retaliation to US tariffs could add to inflationary pressures in the short run".
ECB President Christine Lagarde said Monday that rate-setters were still faced with "lots of uncertainties" when it came to the inflation outlook, including the impact of potential tariffs.
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