Eurozone Preliminary HICP inflation declines in March

The most recent information released by Eurostat on Friday revealed that the annualised Harmonized Index of Consumer Prices (HICP) for the Eurozone decreased to 6.9% in March from 8.5% in February. The market anticipated a decrease in the inflation rate to 7.1% for the reporting period.

Contrary to expectations of 5.7% and 5.6%, the core HICP remained stable at 5.7% YoY in March.

The HICP for the old continent surprisingly increased by 0.9% in March, above predictions of 0.8% and the prior month’s 0.8% increase. In contrast to the 0.6% predicted and the 0.8% seen in February, the core HICP reached 1.2% last month.

A day after Germany’s annual HICP for March, which increased by 7.8% and above predictions of a 7.5% increase while following a 9.3% advance seen in February.

Note that the European Central Bank’s (ECB) inflation target is 2%.

Investors closely scrutinize the bloc’s HICP figures to evaluate the ECB rate hike expectations. Markets are now pricing an 88% probability of a 25 basis points (bps) ECB rate increase in May.