Euro area’s final HICP inflation for April is expected to confirm the flash readings of -0.2% y/y, said Societe Generale in a research report. This will be slightly weaker than March’s print. The headlined figure is weighed on by the energy component in spite of a slight rise on a monthly basis. However, core inflation decelerated to 0.7% y/y, as compared with 1% y/y in March.
The slowdown in core inflation was due to services inflation reversing sharply in April, following a considerable rise in March on back of Easter holidays. Services inflation decelerated to 0.9% y/y according to flash estimates, from 1.4% y/y in March. Euro area’s HICP inflation is likely to remain negative until June and rebound solidly in the second half of 2016 to average 0.4% in 2016 and 1.7% in 2017, added Societe Generale.
“The core metric should average 1.0% in 2016 and 1.3% in 2017”, noted Societe Generale.
