The flash estimate of HICP inflation was in line with expectations in March and quickened to -0.1% yoy from -0.3% yoy in February. Core inflation came in at 0.6% yoy, down from 0.7% yoy in February. The energy component explained the bulk of the rise in inflation, up from -7.9% yoy to -5.8%, adding 22bp to the headline figure.
Food, alcohol and tobacco price inflation accelerated slightly from 0.5% yoy to 0.6% yoy while non-energy industrial goods inflation remained negative (up from -0.2% yoy to -0.1% yoy).
The surprise came from services prices which dropped more than expected, down from 1.2% yoy in February to 1.0% yoy in March.
With the Easter holidays starting in early April, services price inflation should quicken by at least a few tenths in April.
According to Societe Generale, HICP inflation to average around 0.2% in 2015 and 1.6% in 2016 while the coregauge should average 0.8% in 2015 and 1.1% in 2016.
