Eurozone: Inflation consensus estimate stands at 1.3% - Rabobank

Today’s HICP release for the Eurozone is likely to drive home the message that the ECB’s goal of achieving durable and sustainable inflation close but below 2% is still far away, according to analysts at Rabobank.

Key Quotes

“The consensus estimate stands at 1.3%, but we feel this number is subject to some downside risk. Although inflation in fresh food and energy likely accelerated in April (especially in Germany sharp gains in food and drinks prices were recorded, whilst oil prices were up EUR 6/bbl between mid-March and mid-April), core inflation may have dropped to 0.8% (consensus: 0.9%) on the back of lower recreation prices due to the timing of Easter (in April, but only just so).”

“Just like with the transitory factors weighing on Q1 GDP, similar arguments can be made for the April inflation numbers. Still, even pencilling in a fairly significant rebound in May, the fact that core inflation could have hit its lowest level since November 2016 is not exactly an encouraging sign. We take this as support for our view that the ECB won’t lift interest rates before September 2019.”