BERLIN, March 27 (Reuters) - German annual inflation likely slowed sharply in March, data from three German states showed on Friday, suggesting the European Central Bank has room to reduce euro zone interest rates further.
Data from the states of Hesse, Brandenburg and North Rhine-Westphalia showed inflation at its lowest levels in at least a decade and pointed to a much lower than expected price rise for Germany as a whole.
Data from six German states are used to calculate a preliminary national inflation figure, due out later on Friday, and give an early indication of price trends in the broader euro zone.
Annual inflation in Hesse and Brandenburg stood at 0.2 percent in March, their lowest readings in 22 and 10 years, respectively. In Germany's most populous state of North Rhine-Westphalia, which released price data on Thursday, inflation was at a 10-year low of 0.3 percent.
Economists polled by Reuters have forecast German
preliminary year-on-year inflation to come in at 0.8 percent and
the euro zone flash reading on March 31 to be 0.9 percent
Should other European inflation data be similar to March's figures from the German states, it would add weight to concern among central bankers over the risk of falling prices despite very low interest rates.
The European Central Bank has cut rates at a record pace in recent months to an all-time low of 1.5 percent, and analysts expect it to cut them again to 1 percent at its next meeting on April 2. [ECB/INT] (Reporting by Brian Rohan; editing by Noah Barkin)