Eurozone: Flash HICP headline rate to tick up to 1.9% y/y – RBC CM

According to the analysts at RBC Capital Markets, the euro area’s ‘flash’ inflation release for February will be the last before the ECB Governing Council meets on March 9 and they expect the headline rate to tick up to 1.9% y/y this month before touching the 2% y/y mark in March.

Key Quotes

“The breakdown of January’s HICP showed that the oil price related categories of the basket, transport and home heating and energy, accounted for around 1 percentage point of the overall y/y rise of 1.8%. The only other major contribution came from unprocessed food, attributable to the unseasonably cold winter in much of Southern Europe. With oil prices continuing to be the dominant determinant of the headline rate, the February print should continue to see core inflation largely unchanged even as the headline rises, allowing the ECB stick to its ‘lack of underlying inflation’ narrative to look through the increase.”