The final estimate of Eurozone inflation last month surprisingly shaved a tick off the flash outturn. At 1.3 percent, the annual rate is now seen up a smaller 0.2 percentage points from its final February mark and so only reversed that month's decline.
However, the headline revision was attributable to the more volatile basket components and, significantly, the core rates matched their respective preliminary readings. Hence, the narrowest measure, which excludes energy, food, alcohol and tobacco, was unchanged from its lowly 1.0 percent mid-quarter print while omitting just energy and unprocessed food the rate was a tick firmer at 1.3 percent. The third core, which excludes only energy and seasonal food, similarly weighed in at 1.3 percent, also up from 1.2 percent.
Confirmation of a pick-up in two of the three underlying inflation measures will be well received at next week's ECB meeting. However, inflation on all the main HICP gauges is still too low for comfort and the likelihood is that an early Easter provided March with at least a small short-term boost. If so, this should be unwound in the April data. In any event, there is no room for complacency, especially should the apparent deceleration in first quarter growth be extended into the current quarter. ECB policy still looks fixed through at least September.
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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