Inflation fell in six economically important German states in March, preliminary data showed on Tuesday, suggesting that national inflation will continue its downward trajectory.

Economists will pay close attention to national inflation data later in the day, as Germany publishes its figures a day before the release of euro zone inflation data on Wednesday.

"The combined message from the data in Germany, France, Italy and Spain is that the eurozone headline harmonised inflation will undershoot the consensus this week significantly," said Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics.

The inflation rate in North Rhine-Westphalia, Germany's most populous state, fell to 2.3% in March from 2.6% in February.

In Bavaria, the inflation rate also fell to 2.3% from 2.6% in February, while in Brandenburg it declined to 2.8% from 3.5%, in Saxony to 2.5% from 3.0%, in Baden-Wuerttemberg to 2.3% from 2.7%, and in Hesse to 1.6% from 2.1%.

Economists polled by Reuters forecast Germany's harmonised inflation at 2.4% in March, down from 2.7% in February.

German companies' price expectations fell in March to their lowest in three years, with inflation set to fall below the European Central Bank's target in the coming months, the Ifo institute said on Tuesday.

The European Central Bank (ECB) has raised interest rates by the most in the euro's history to bring inflation down from double digits.

ECB chief Christine Lagarde said in March the eurozone's inflation rate was set to keep falling, while economic growth would start picking up during the year.

"The fall in CPI inflation in the major German states in March all but confirms that both German and eurozone harmonised inflation will come in lower than expected in March," said Franziska Palmas, senior Europe economist at Capital Economics.


Euro zone inflation is expected at 2.6% in March, unchanged from the previous month, a Reuters poll of economists shows.

A growing number of ECB policymakers have supported rate cuts, with a June meeting shaping up as the most likely time for action, although there is also a meeting set for this month.

Palmas said a lower-than-expected eurozone inflation print would please ECB policymakers. "But we still think they will wait until June before cutting rates." (Reporting by Maria Martinez; Editing by Sonali Paul and Clarence Fernandez)