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Prices across the eurozone fell for the second month in a row in the year to March, as the slump in oil costs continues to weigh on inflation across the world.

Headline inflation in the eurozone edged up to minus 0.1 per cent, from minus 0.2 per cent in the year to February, according to Eurostat, the European Commission’s statistics bureau. The core rate, which excludes changes in the cost of more volatile items such as food and energy products, rose from 0.8 per cent to 1 per cent.

While the headline figure remains way below the European Central Bank’s target of just under 2 per cent, the rise in both measures will bring comfort to officials as they attempt to restore inflation towards their target.

There were also encouraging signs in the cost of services provided by businesses. They rose by 1.3 per cent, up from 0.9 per cent. The rise suggests domestic demand within the single currency area is holding up, despite the slowdown in other parts of the global economy. The pick-up could also be down to the early Easter break, however, warned economists.

The ECB’s governing council unleashed a fresh round of stimulus earlier this month, cutting rates to another record low and adding another €20bn a month of bond purchases to its landmark quantitative easing programme in an attempt to restore inflation to the central bank’s target of just below 2 per cent.

Oil prices remain the main drag on prices: energy costs fell by 8.7 per cent in the year to March, a sharper pace than in February when they fell by 8.1 per cent.

Inflation is expected to remain weak in the months ahead and is likely to stay below the ECB’s target until at least 2018, according to the central bank. The latest forecasts produced by the central bank’s economists show inflation hitting 0.1 per cent this year, before rising to 1.3 per cent in 2017 and 1.6 per cent in 2018.

“Country data already released suggest that [the rise in services inflation. have partly reflected the early timing of Easter raising inflation in some leisure sectors,” said Jonathan Loynes, chief European economist at Capital Economics, a consultancy. “As such, the increase could be reversed in April.”

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