By Aidan Meikle

Euro zone inflation is expected to sink further below target when flash data for March is released on Tuesday, dragged down by falling oil and energy prices, a Reuters poll showed on Friday.

Forecasts from 38 analysts suggest inflation was just 0.8 percent in March, well down from February’s 1.2 percent. This compares with January’s 1.1 percent and December’s 1.6 percent. Forecasts for March ranged from 0.5 to 1.0 percent.

‘The fall in inflation is driven largely by the decrease in oil prices. Energy is now significantly cheaper than a year ago,’ Joerg Kraemer at Commerzbank said.

Data released earlier on Friday from Germany, the bloc’s largest economy, showed inflation there had slowed sharply to just 0.5 percent in March, its lowest level in nearly a decade and below the 0.8 percent expected.

The euro zone forecasts were mostly collected before the release of the German data, suggesting that the rate in the 16-nation bloc may have fallen further than the already low levels economists had expected.The European Central Bank aims to keep annual consumer price inflation just below two percent. The below-target numbers — and expectations that it will fall further — will strengthen convictions that the ECB will cut interest rates when it meets on Thursday.

‘The ECB are expected to come in with a further 50 basis point rate cut and has plenty of room to perform such actions given inflation is likely to fall below 1 percent,’ ING said in a research note.