Eurozone inflation was unexpectedly revised a little softer in the final data for February. A 0.2 percent monthly rise in the HICP saw the 1.2 percent annual rate indicated in the flash report trimmed by a tick to 1.1 percent. This makes for a 0.2 percentage point decline versus the final January outturn as well as the third fall in a row and the weakest print since December 2016.
However, more importantly, the core rates matched their respective preliminary estimates. Hence, the narrowest measure, which excludes energy, food, alcohol and tobacco, saw its yearly rate unchanged from January's final 1.0 percent mark while omitting just energy and unprocessed food the rate was steady at 1.2 percent. Without energy and seasonal food, inflation similarly moved sideways at also 1.2 percent.
Non-energy industrial goods inflation was 0.6 percent, in line with the January outcome, while services posted a 0.1 percentage point rise to 1.3 percent. Food, alcohol and tobacco decreased from 1.9 percent to 1.0 percent while energy was off a tick at 2.1 percent.
Despite last week's decision to switch from an easing to a neutral bias, the majority of the ECB's Governing Council remain firmly in favour of maintaining the current very accommodative monetary stance. The sluggishness of underlying inflation is still a major problem and until there are convincing signs that the near-2 percent target can be achieved on a sustainable basis, policy will go nowhere in a hurry.
The harmonised index of consumer prices (HICP) is a measure of consumer prices used to calculate inflation on a consistent basis across the European Union. Changes in the index provide an estimate of inflation, as targeted by the European Central Bank (ECB). Eurostat provides statistics for the EU and Eurozone aggregates, individual member states and for the major subsectors. Over the short-term, the central bank focusses on a number of core measures which seek to strip out the most volatile components and so give a much better guide to underlying developments. Amongst these, financial markets normally concentrate upon the narrowest gauge which excludes energy, food, alcohol and tobacco.
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