Eurostat is scheduled to unveil the Eurozone Harmonised Index of Consumer Prices (HICP) data for February on Friday, March 1, at 10:00 GMT. As the release approaches, here are the anticipated figures from economists and analysts at five major banks regarding the upcoming EU inflation report.
Projections suggest a decline in Eurozone’s HICP to 2.5%, following the previous 2.8% year-on-year figure recorded in January. Concurrently, Core HICP is expected to decrease from 3.3% to 2.9%. The last instance where underlying inflation remained below 3% occurred in February 2022, just prior to Russia’s invasion of Ukraine.
Commerzbank
Upon initial examination, the consumer price data for February appears to align with the dovish sentiments within the ECB’s Governing Council. The anticipated drop in the inflation rate from 2.8% to 2.7% and, notably, the decrease in the inflation rate excluding volatile energy and food prices from 3.3% to 3.0% are factors that could intensify speculation about the likelihood of an imminent rate cut
TDS
The Euro Area inflation is anticipated to witness a further descent in February, with the headline rate likely diminishing to 2.6% YoY, while the core rate is poised to reach a 24-month low at 2.9% YoY. Encouraging developments are expected in core dynamics, projecting a decline in core goods inflation to 1.5% YoY, marking its lowest point since July 2021. Simultaneously, a sustained softening in the momentum of services is likely to contribute to bringing the YoY rate down to a 20-month low of 3.6%.
The inflationary dynamics are influenced by various factors, including energy exerting some upward pressure on the overall print. This is attributed in part to base effects in the natural gas component and a significant 9% month-on-month increase in French electricity prices. The government’s gradual phasing out of the tariff shield, which shielded households from previous price spikes, plays a role in this regard. Additionally, petrol prices experienced an approximate 2.5% month-on-month increase in February, driven by the upward trajectory in wholesale oil prices.
SocGen
Anticipating the January data, we project a 0.3 percentage point decline in both headline and core inflation prints, settling at 2.5% and 3%, respectively, with a potential for some downside risk. While our core forecast hovers on the edge of 2.9%, there is a plausible risk of a more subdued reading.
Citi
The upcoming Euro Area flash February HICP release on Friday holds significant potential as a pivotal data point. There’s an anticipation of the headline HICP declining further towards the target, potentially reaching 2.5%. However, it’s worth noting a cautionary point that the core HICP might register an above-average 0.3% month-on-month (seasonally adjusted) reading.
Wells Fargo
The February inflation data holds significant sway in determining whether the ECB opts for an interest rate cut as early as April or adopts a more patient stance, deferring the decision until the June meeting. Expectations for the February CPI point to positive inflation developments, with base effects likely resulting in a further slowdown of headline inflation to 2.5%YoY, and core inflation is also predicted to ease to 2.9%. Of interest is whether services inflation will decelerate from its current pace of 4.0%. Should Eurozone CPI inflation follow the anticipated deceleration or even present a downside surprise, it would keep the possibility of an April rate cut on the table. Conversely, an unexpected upside surprise disrupting the disinflation trend would align with the views of some more hawkish ECB policymakers and could potentially remove the prospect of an April rate cut
