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Inflation in Spain pulled back more than expected in March, according to early estimates from the country’s National Statistics Institute.

Prices increased only 1.1 per cent in the month on an EU-harmonised basis, compared to forecasts of a 1.5 per cent rise.

That meant the year on year inflation rate fell to 2.1 per cent, compared to a four-year high of 3 per cent in February. Economists had expected a more modest decline to 2.7 per cent.

The change reflected a lower year impact from changing fuel and electricity prices compared to the previous month.

Figures at the European Central Bank have highlighted the fragility of the recent uptick in inflation across the Eurozone, which has been driven by volatile energy prices.

Early regional data suggest Germany experienced a similar softening in inflation this month.

Last week, the ECB’s chief economist Peter Praet said caution is warranted on eurozone inflation, noting that “inflation is higher because of oil, which, by the way, has fallen by 10 per cent recently”.

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