(CN) — In the months leading up to the EU and the U.S. one-upping the other on whiskey prices, data published by Eurostat on Tuesday reported low and slow changes in the euro area’s inflation rate.
Following last month’s 25% tariff on steel, aluminum and car imports, Trump is expected to announce further tariffs on Wednesday under the name “Liberation Day,” including a potential 200% hike on European alcohol imports.
While warning that tariffs hurt everyone, European Commission president Ursula von der Leyen promised a strong response to the U.S., aimed at maintaining the EU’s reputation for being a stable trade partner.
“Tariffs are taxes that will be paid by the people. Tariffs are taxes for the Americans on their groceries and their medication. Tariffs will just fuel inflation. Exactly the opposite of what we want to achieve,” von der Leyen told the European Council last month.
With von der Leyen’s forecast of an economic storm on the horizon, Eurostat reported calm seas for inflation so far. Over the last two months inflation decreased to 2.2% across the euro area, which encompasses the 20 nations using the euro as currency. The euro area’s highest inflation rate over the last year landed at 2.5% in January.
European economists have yet to release updated inflation rates for the European Union as a whole, but the euro area typically lags behind the EU in inflation.
While inflation rates in non-energy industrial goods largely remained stable over the last two months, economists recorded slight declines in services and energy inflation, along with a small increase in the prices paid for food, alcohol and tobacco, from 2.7% in February to 2.9% in March.
Comparing March 2025 with March 2024, Croatia, Estonia and Slovakia tied for the highest inflation rate in the euro area, at 4.3%. At the same time, Finland and Ireland recorded the area’s lowest inflation rates, at 1.5% and 1.4% respectively. During the same period, U.S. inflation dropped below 3%.
Between February and March, Portugal and Greece recorded the euro area’s highest increases in inflation, while Luxembourg, Estonia and Belgium reported inflationary decreases.
Until the 2020 pandemic threw the global economy into a period of sudden uncertainty, inflation had remained under 2.3% across the EU for several years. While rising costs of energy drove 2022’s record-high 10.6% inflation in the euro area — thanks in large part to Russia’s invasion of Ukraine — the costs of services have proved to be the main factor driving up prices at the end of 2024.
Last year, the European Central Bank set monetary policy around the goal of stabilizing inflation at 2%, when unpredictable energy prices were considered the greatest challenge rather than tariffs.
According to a macroeconomic projection published by the European Central Bank last month, economists expect energy to increase over the next two years as more climate change mitigation measures take place.
“Food inflation is projected to rise until mid-2025, mainly driven by recent robust increases in food commodity prices, before declining to stand at an average of 2.2% in 2027,” economists predicted in the report.
Along with inflation’s many ups and downs, the euro area tracked little change in unemployment rates through the beginning of the year. According to data released Tuesday, Eurostat reported a 6.1% unemployment rate in February, down from 6.2% in January.
Compared to the euro area in 2024, an estimated 643,000 fewer people are out of a job today. Since unemployment neared 12% in 2013, the euro area’s rate of joblessness has generally been on the decline. During the 2020 pandemic, unemployment peaked at 7.8%
At 10.4%, Spain reported the highest unemployment rate in February, followed by Finland and Sweden, both near 9%. Malta and Poland both reported the lowest unemployment rates, well below 3%. During the same period, U.S. unemployed inched up a tenth of a point to 4.1%.
Unemployment rates for young people remain higher than average. Across the euro area, an estimated 14% of people under the age of 25 are unemployed, roughly 2.8 million people.