Research Team at TDS, notes that the February’s flash euro area CPI showed a move back into negative territory, posting -0.2% y/y, confirming our view of downside risks to consensus.
“The weak print reflects Friday’s regional prints, which were driven primarily by declines in energy prices in recent months. Core inflation, however, also moved down by more than expected, registering 0.7% y/y (consensus/TD: 0.9%).
Here, the decline was driven by both the non-energy industrial goods and services components, suggesting broad weakness in price pressures. February’s data is likely to be the first of a string of negative headline inflation prints, as lower energy prices drag on the headline number. This should set the ECB up nicely for a big easing package at their March meeting.”
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