In February, the flash HICP estimate showed euro zone inflation dropped from 1.0% Y/Y to 0.9% Y/Y, exactly in line with the consensus estimate. It was the first drop in the annual inflation rate since September last year, giving the ECB ample room to keep interest rates low. In the coming months excess capacity and the slow recovery are expected to keep inflation low. Producer prices, on the contrary surprised on the upside of expectations rising from -2.9% Y/Y to -1.0% Y/Y, while an outcome of -1.1% Y/Y was expected. Most of the increase was energy-related; nevertheless the data are rather outdated.
In Spain, unemployment rose for the seventh consecutive month in February. The number of people registering for unemployment benefits rose by 82 132 (or more than 2%) while an increase by 62 200 was expected. The total number of people registered for unemployment benefits rose to 4.1 million, the most since at least 1996, the earliest year for which comparable data are available. According to data from Eurostat, published yesterday, Spain had an unemployment rate of 18.8% in January, nearly twice the rate (9.9%) for the wider euro zone. The government expects the Spanish economy to start creating jobs again toward the end of the year.
