Euro area’s Feb final HICP inflation likely confirmed flash estimate

Euro area’s final HICP inflation data for February is unlikely to give any surprises. It is expected to confirm the flash estimate of -0.2% y/y. The flash estimate had stated that all major components were lower. Energy prices declined further to -0.8% y/y from -5.4% y/y. Meanwhile, food prices weakened to 0.7% y/y from 1% y/y.

According to the flash estimate, February’s core component was also lower as prices of non-energy industrial services and goods declined. Prices of non-energy industrial goods declined to 0.3% y/y from January’s 0.7% y/y. They had rebounded noticeably in 2015. Meanwhile, non-energy services inflation decelerated by a few ticks to 1% y/y.

“We expect euro area HICP inflation to average 0.6% in 2016 and 1.6% in 2017, while the core metric should average 1.1% in 2016 and 1.3% in 2017”, says Societe Generale.