The final euro-area CPI inflation rate for May, due on 17 June, is likely to match the flash release at 0.3% y/y, up from 0.0% prior. Core CPI likely also matched the flash, up to 0.9% y/y.
The two factors likely contributing to this pick-up are the recent sharp rise in oil prices and euro depreciation in the past year; the detailed report will reveal whether there were special - temporary - factors behind the unexpected surge in core inflation. In the medium term, inflation will likely remain subdued as long as there is significant spare capacity in the economy that needs a sustained period of above-trend growth in order to shrink, says Standard Chartered in a report on Tuesday.
