BRUSSELS, March 31 (Xinhua) -- Euro area annual inflation is expected to rise to 2.5 percent in March from 1.9 percent in February, driven by a steep rise in energy prices, which climed to 4.9 percent from -3.1 percent, according to a flash estimate published by Eurostat on Tuesday.
In contrast, services inflation eased slightly to 3.2 percent from 3.4 percent, while prices for food, alcohol and tobacco edged down to 2.4 percent from 2.5 percent. Non-energy industrial goods rose by 0.5 percent, compared with 0.7 percent in the previous month.
Excluding energy, food, alcohol and tobacco, core inflation fell to 2.3 percent in March from 2.4 percent in February.
Among major euro area economies, inflation is expected to reach 2.8 percent in Germany, 1.9 percent in France, 1.5 percent in Italy and 3.3 percent in Spain.
"The war in the Middle East has made the outlook significantly more uncertain, creating upside risks for inflation and downside risks for economic growth," the European Central Bank (ECB) said earlier.
The ECB said its latest projections showed higher inflation expectations and weaker economic growth, particularly for 2026, reflecting the global impact of the war on commodity markets, real incomes, and confidence.
Euro area inflation is projected to average 2.6 percent in 2026, while economic growth this year is expected to stand at 0.9 percent.
The ECB warned that inflation could rise further if higher energy prices spill over into other sectors or if the conflict disrupts global supply chains more broadly.
ING Chief Economist Bert Colijn said the Middle East situation dominates the inflation outlook, posing upside risks not only to energy prices but also to food and goods prices due to fertiliser shortages and supply chain disruptions.
He added that the longer the disruption lasts, the greater the likelihood of broader increases in both headline and core inflation, with the ECB focusing on keeping inflation expectations anchored around 2 percent.
On Feb. 28, the United States and Israel launched large-scale military operations against Iran. Iran responded with strikes on Israeli targets and U.S. bases across the region.
Ongoing tensions in the Middle East, now entering their fifth week with no clear resolution in sight, have led to a sharp increase in energy prices. ■
