• Prior +1.9%
• Core CPI +2.3% vs +2.3% y/y prelim
• Prior +2.4%

No surprises there as euro area inflation is seen picking up in March as a result of surging energy prices. The US-Iran conflict is the main issue impacting the inflation outlook now and will continue to be the case for the months ahead. The monthly inflation estimate is seen rising by 1.3% in March, after a 0.6% increase in February.

Amid the surge in oil and gas prices, energy price inflation was seen up 7.0% on the month in March. From an annual perspective, it is seen higher by 5.1% compared to the same month last year. That as opposed to a 3.1% decline when viewed from the February month.

Overall, that sees energy prices contribute positively (+0.48%) to headline annual inflation in the region. Previously, energy price inflation had a negative drag of 0.30% in February.

The detailed breakdown shows positive contributions all around with food price inflation at +0.45%, services inflation at +1.49%, and non-energy industrial goods inflation at +0.13%. That comes up to the finalised headline estimate of 2.55% unrounded.

As for core annual inflation, it is seen down to 2.3% from 2.4% previously. However, the spillover impact from higher energy prices to the broader economy will eventually play a role in pushing this number up surely. The main question is how “transitory” will the impact here be. And in turn, that will be how the ECB needs to manage in navigating monetary policy.

This article was written by Justin Low at investinglive.com.