Eurozone HCPI Preview: Forecasts from six major banks, not peaking yet

The eurozone will release its April Harmonised Index of Consumer Prices (HICP) report on Friday, April 29 at 09:00 GMT and as we closer to the release time, here are the expectations forecast by the economists and researchers of six major banks regarding the upcoming EU inflation print.

Expectations are for HICP to rise further to 7.5% YoY in April (prev. 7.4%), with the core metric (ex-food and energy) seen rising to 3.3% YoY (prev. 3.2%).

Commerzbank

“The inflation rate in the euro area is expected to remain unchanged at 7.4% in April. Oil and gas prices have fallen again somewhat after the dramatic increase in March, and some countries are relieving consumers with discounts at the pump station or tax cuts. Therefore, consumer prices for energy in April are likely to have risen somewhat less YoY than in the month before. However, the rise in energy prices is increasingly reflected in the prices of other goods. In addition, the renewed lockdowns of megacities in China are exacerbating global supply problems and driving up the cost of intermediate goods. Accordingly, the core inflation rate is likely to have risen from 2.9% to 3.4% in April. The inflation rate in the euro area is not expected to fall sustainably until the summer, provided that energy prices start to fall again as we expect. However, the underlying upward pressure on prices will probably continue to strengthen.”

Danske Bank

“Inflation risks remain skewed to the upside despite the latest stabilization in oil, gas and electricity prices. We look for a further climb in the headline HICP rate above 8%, with core inflation remaining elevated at 3.1%, keeping the pressure high on ECB to proceed with its policy normalisation.”

ING

“The eurozone is anxiously awaiting the next inflation figure, which will no doubt be above 7% again. The question is mainly whether it is again higher than the 7.5% seen in March or whether the decline in oil and gas prices since early March has translated into a small drop in headline inflation. We expect the former to be the case, also because of second-round effects from energy prices on core inflation.”

SocGen

“After nine months of consecutive increases, we expect HICP to fall by 0.1pp to 7.3% in April. Conversely, we think core inflation will continue to accelerate to 3.3% YoY, up from 2.9% in March.”

Nomura

“We forecast only a small further rise in euro area HICP inflation in April to 7.6%, with lower fuel prices (petrol prices fell during the month as oil prices dropped) counteracting somewhat our assumption of a rise in core inflation.”

Citibank

“Energy price likely dropped sharply in April and while the peak in energy inflation may be behind, we still expect strong MM prints for food HICP and non-energy goods. Domestically-generated services inflation to remain subdued but overall, headline inflation should tick higher to 7.6% and core to 3.4% YoY.”