Laurent Clavel, Head of Macroeconomic Research at AXA Investment Managers (AXA IM), comments on today’s European Monetary Union inflation report.
Laurent Clavel, Head of Macroeconomic Research at AXA Investment Managers (AXA IM), comments on today’s European Monetary Union inflation report.
Eurozone May flash inflation came out at +1.4% year on year (y-o-y), down 0.5pp from April, with the energy base effect progressively vanishing, creating a similar pattern in all member states.
Core inflation also fell back (to +0.9% from +1.2%), as we expected and with the peculiar Easter seasonality effect (especially visible in Germany) which lowered March service inflation and exaggerated the April print before coming back to normal in May at +1.3% y-o-y.
Some one-off effects, such as tourist package prices in Spain and air transport in France, may explain part of the slowdown in core inflation.
Nevertheless, this publication confirms our forecast of a very gradual pick-up in Eurozone core inflation (+1.1% on average in 2017) which will support the ECB’s dovish stance and pleads for a cautious normalisation of monetary policy, as we underlined in our recent research paper copied below.
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