Inflation Eases in March, but Tariff Concerns Loom

In March 2025, both the United States and the Eurozone experienced a notable deceleration in inflation rates, offering a temporary reprieve for consumers and policymakers. However, the recent implementation of extensive trade tariffs by the U.S. government has introduced new uncertainties that could influence future inflation trajectories.

U.S. Inflation Slows Ahead of Tariff Impact

The U.S. Consumer Price Index (CPI) rose by 2.4% year-over-year in March, down from 2.8% in February, marking the lowest annual increase since early 2023. Core inflation, which excludes volatile food and energy prices, increased by 2.8%, the smallest rise since March 2021 .

This cooling trend is attributed to significant declines in energy prices, with gasoline prices dropping sharply, and a moderation in shelter costs. Despite these positive indicators, economists caution that the recent imposition of a 125% tariff on Chinese imports by the Trump administration could reverse these gains. The tariffs are expected to raise production costs, which may be passed on to consumers, potentially reigniting inflationary pressures .

Producer prices also reflected a downward trend, with the Producer Price Index (PPI) falling by 0.4% in March, the first monthly decline in 18 months. However, certain sectors, such as steel mill products, saw price increases, indicating that the full impact of the tariffs is yet to materialize .

Eurozone Inflation Continues to Decline

In the Eurozone, annual inflation decreased to 2.2% in March from 2.3% in February, aligning closely with the European Central Bank’s (ECB) target. The decline is largely due to easing energy prices and a slowdown in service sector inflation .

Core inflation in the Eurozone, which excludes energy, food, alcohol, and tobacco, also moderated, reaching 2.4%, the lowest since January 2022 . These developments may influence the ECB’s monetary policy decisions in the coming months.

Outlook: Navigating Uncertainty

While the recent data suggests a cooling of inflation, the introduction of substantial tariffs by the U.S. raises concerns about potential supply chain disruptions and increased costs for businesses and consumers. Economists warn that these factors could lead to a resurgence of inflation, complicating the efforts of central banks to manage economic stability.

As the global economy grapples with these developments, the coming months will be critical in determining whether the current easing of inflation is a temporary respite or a sustained trend.