Consumer prices provisionally rebounded 0.5 percent on the month in February. This was in line with expectations but still soft enough to shave a further couple of ticks off the annual inflation rate which now stands at 1.4 percent, its weakest outturn since November 2016.
The flash HICP similarly recovered some of its hefty seasonal loss at the start of the year. However, a 0.5 percent monthly jump still left its annual rate at a lowly 1.2 percent, also 0.2 percentage points below its final January mark.
However, the deceleration in the yearly CPI rise was largely due to the more volatile basket components. Hence, the rate for energy declined 0.8 percentage points to 0.1 percent while food was down a full 2 percentage points at 1.0 percent. Elsewhere, overall goods inflation slowed from 1.5 percent to 1.0 percent and rent, excluding utilities dipped a tick to 1.6 percent but services held steady at 1.6 percent, its third straight month at this level.
Today's German report increases the likelihood of another fall in overall Eurozone inflation this month (flash data due tomorrow). However, the signs are more favourable for the key core rates and any downside risk here appears quite limited.