Eurozone HICP Preview: Forecasts from six major banks, core inflation to reach new record high

Eurostat will release the preliminary estimate of Eurozone Harmonised Index of Consumer Prices (HICP) data for February on Thursday, March 2 at 10:00 GMT and as we get 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.

Headline is expected at 8.2% year-on-year vs. 8.6% in January while core is expected to remain steady at 5.3%. On a monthly basis, the HICP in the old continent is expected to fall by 0.3% in the reported period as against the previous decrease of 0.2%. The core HICP is likely to show no growth at 0% in February vs. -0.8% prior.

Commerzbank

“In the euro area, inflation continues to be strongly dominated by the development of energy and food prices. In February, energy prices fell significantly, which will probably push the inflation rate down from 8.6% to 8.1%. However, from the ECB's point of view, it is probably more significant that the core inflation rate remains at a high 5.3%. This shows that underlying inflation remains high.”

TDS

“Softer energy inflation likely continued to weigh on headline inflation in the EZ. That said, on MoM basis, energy inflation likely stayed resilient, in part as subsidized prices won't have declined by as much as wholesale prices. Core will be the main focus though, and another strong print will add more pressure on the ECB to keep hiking in 50 bps clips after Mar.” 

Nomura

“We expect the headline rate to be unchanged at 8.6%, but see core rising to 5.6%, which will be the highest since 1993.”

SocGen

“We expect the February HICP to decelerate from 8.6% to 8.2% YoY, dragged down by energy inflation but core inflation should be up 0.2pp to 5.5% YoY and will likely stay above 3.5% this year.”

Citibank

“Eurozone headline inflation should edge lower in the February flash HICP but only slightly, confirming the passthrough of lower gas prices takes time. However, we expect another solid MoM print on core CPI. Services inflation should edge higher while the January uptick in core goods HICP is likely to reverse only partially and probably not before March/April. Euro Area HICP, February: Citi Forecast 8.5% YoY, Prior 8.6% YoY; Core CPI, Feb: Citi Forecast 5.4% YoY, Prior 5.3% YoY.”

Wells Fargo

“All signs point to headline inflation having already peaked and now trending lower. On the other hand, it is less clear when underlying inflation will begin to recede substantially. In response to still-present inflation pressures, we do not think the ECB is finished monetary tightening quite yet. We expect the ECB to follow through on its guidance for another 50 bps rate hike in the Deposit Rate in March and expect two additional 25 bps increases in May and June, which would see a peak at 3.50% for the current cycle.”