EU HICP Preview: Forecasts from seven major banks, headline inflation falls sharply, but core remains high

Eurostat will release the preliminary estimate of Eurozone Harmonised Index of Consumer Prices (HICP) data for March on Friday, March 31 at 09:00 GMT and as we get closer to the release time, here are the expectations forecast by the economists and researchers of seven major banks regarding the upcoming EU inflation print.

The flash estimate for Eurozone is likely to decelerate to 7.2% YoY in March vs. 8.5% in February while the annualized Core HICP is seen a tad higher at 5.7% vs. 5.6% in February. 

Commerzbank 

“In the euro area, the inflation rate is likely to have fallen from 8.5% in February to 6.8% in March. This is because the massive rise in energy prices in March 2022 is now excluded from the year-on-year comparison. However, from the ECB's perspective, it is likely to be more important that the core inflation rate probably remains at 5.6%. This would show that underlying inflation remains high.”

Danske Bank

“Despite a further decline in headline inflation to 7.9%, we expect Euro area HICP figures for March to show still a picture of strong underlying inflation pressures, with core inflation remaining unchanged at 5.6%.”

Deutsche Bank

“We see March headline at 7.1% (+1.1% MoM) and core at 5.8% (+1.4% MoM). As a reminder, the latest 5.6% core inflation reading is the highest on record. We don't expect it to peak until the 6.0% they expect in July.”

Citi

“We see headline HICP falling to 6.8% on energy base effects but core CPI still accelerating to 5.7%.”

TDS

“Headline inflation is set to plunge across the EZ to 7.3 YoY as the spike in energy prices following Russia's invasion of Ukraine drops out of the YoY calculation. Some reversal of Feb's weather-related jump in fresh food prices also adds some downside pressure. Focus will be on the core measure, though, and another strong print  (our forecast is 5.8%) will maintain pressure on the ECB to hike rates further.”

SocGen

“Negative energy base effects should lead to a massive deceleration in headline inflation from 8.4% to 6.7% in March. However, given the recent upside surprise, especially in food inflation, we believe there is upside risk to this forecast. Furthermore, the strength in core inflation should continue. We anticipate an increase from 5.6% to 5.7%, again, with the risks tilted to the upside.”

Credit Suisse

“We expect headline inflation to fall from 8.7% to 8.5% YoY and core inflation to rise from 5.6% to a new all-time high of 5.8% YoY in March.”