Eurozone Inflation Eases In February But Core Prices Surge  

 

• Eurozone inflation fell less than expected last month and underlying price growth surged, reinforcing the case for the European Central Bank to keep raising interest rates at a brisk pace, data from Eurostat showed on Thursday.
• Consumer price inflation in the 20 countries sharing the euro currency eased to 8.5% in February from 8.6% a month earlier as a big fall in energy costs offset a price surge in nearly all other areas, but still came in above expectations for 8.2% in a Reuters poll of economists.
• Investors now see the ECB's 2.5% deposit rate rising by a combined 100 basis points in March and May, then to around 4.1% at the turn of the year, with markets having priced in an extra 50 basis points of hikes in the past month alone.
• Bundesbank President, Joachim Nagel, has already argued that the recent fall in energy prices only lowers short-term inflation and does not improve medium-term prospects, so the ECB may need to opt for another large rate hike in May.
• However, ECB’s chief Christine Lagarde argued that disinflation will pick up speed from next month as surging gas prices at the onset of Russia's war in Ukraine get knocked out of base figures.

(Source: Reuters)