Euro area flash HICP inflation for April is likely to return to negative territory, according to Societe Generale. It is expected to come at -0.1% y/y from 0.1% y/y. Services prices had risen in March as Easter holiday came early this year, which resulted in core inflation to recover to 1% y/y.
Services price inflation is expected to have slowed to the level seen in February, noted Societe Generale. Energy component is expected to have dropped by a lesser amount due to recovery energy prices. Meanwhile, food prices are expected to remain stable in April after rebounding slightly in March, said Societe Generale.
Amongst core components, the recovery seen in services inflation in March is expected to have waned in April and is likely to decelerate to 1.1% y/y. Non-energy industrial goods are likely to have slightly weakened.
“We expect euro area HICP inflation to average 0.4% in 2016 and 1.7% in 2017, while the core metric should average 1.0% in 2016 and 1.3% in 2017”.
