Flash euro area HICP inflation is expected to print at 0.2% yoy in May on higher energy prices. Oil prices rose rapidly in March and remained range-bound in May. The pass-through effect that was expected in the April data didn’t materialise, so May is expected to show a large pick-up. This has already been evident in the flash releases from Spain and Italy last week, both of hich came in higher than expected due to the energy component. Societe Generale notes:

  • We don’t expect much movement in the other components, as the effect of the Easter holidays should have passed. 
  • We expect core inflation to print at 0.7% yoy. In April, euro area inflation was 0.0% yoy, up from -0.1% yoy in March on higher prices in the goods, services and energy components. Services prices contributed negatively due to the effect of the Easter holidays. 
  • We expect euro area HICP inflation to average 0.4% in 2015 and 1.5% in 2016, while the core metric should remain stable at 0.7% in 2015 and 1.1% in 2016.

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