Eurozone headline inflation likely to print 1.4% in March - Rabobank

For European market watchers, they key data to watch today are Eurostat’s flash estimate(s) for headline and core inflation for March and the consensus estimate is for an acceleration of headline inflation from 1.1% in February to 1.4% in March, points out the research team at Rabobank.

Key Quotes

“Data released in the four biggest Eurozone member states thus far are consistent with this projection. A recovery in (unprocessed) food price inflation from a negative rate in February and a pickup in energy inflation are the key drivers of this rise in headline inflation. However, we expect core inflation to have remained stuck at 1% (consensus: 1.1%) reflecting low wage pressures and a slow pass-through of underlying cost pressure to end-users. That said, the Eurozone unemployment rate is expected to fall by another 0.1%-points to 8.5%, which would be the lowest level since December 2008. As such, the conundrum of an ever-tightening labour market but still low wage pressure is being maintained. But this should no longer surprise anyone.”