Fri, Jun 26 2009, 10:22 GMT
by UniCredit Research
CPI data out so far in three German states and the drop in Belgian inflation to -1.1% y-o-y (vs. the previous -0.4%) are consistent with our forecast that eurozone inflation in June will ease 0.1pp to -0.1% y-o-y. We therefore stick to our call, and see risks as broadly balanced. The flash estimate is due on Tuesday.
For June, in the eurozone we have penciled in a strong increase in the price of oil products, but a favorable base effect implies that energy prices probably were little changed in y-o-y terms. As we expect stability also in core inflation, it is food prices that will probably push overall inflation lower. A tobacco tax hike is clearly visible in the data coming out from Germany and, among the largest economies, is expected to take place also in Spain.
Looking further out, July will most likely mark the trough in eurozone inflation throughout the forecast horizon. The fact that oil prices have stabilized at around USD 70 p/b for the time being suggests no tangible oil-driven upside risks to our projections.
Published on Fri, Jun 26 2009, 10:29 GMT
UniCredit Group
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