The headline annual inflation rate in the Eurozone is expected to hold steady this month, and the economy in the currency area likely showed a smidgen of growth last quarter, according to analysts.
An economists’ poll predicted that after three straight declines, headline annual inflation in the euro area held steady at 2.4%.
The core inflation rate is forecast to continue its slowdown with a drop to 2.6% from 2.9%.
“Inflation has declined in recent months, but the underlying momentum in service inflation has picked up,” wrote Danske Bank, whose predictions were in-line with the consensus. “The key thing to look out for is service inflation, which has gained momentum recently and remains sticky on the back of recent wage increases.”
Unless the latest inflation numbers are much higher than expected, the European Central Bank is unlikely to veer from its path toward interest rate cuts in June.
Monetary policymakers at the ECB continue to tell the market they are ready to cut interest rates in June (Photo: Culp)
Euro-area big four to offer diverse inflation data
Consumer price growth in the Eurozone’s four largest economies often foreshadows the result for the currency area, and they are likely to send mixed signals this month. Spain, the fourth biggest economy, said Monday that its annual EU-harmonised inflation rate ticked up a tenth to 3.4% this month. Germany, Europe’s largest economy, was expected to announce a repeat of March’s 2.3% rate of EU-harmonsied consumer price growth on Monday afternoon.
France, the second-largest euro area economy, is to report Tuesday morning, with projections signalling a decline in the EU inflation rate to 2.2% from 2.4% in March. Italy, the third-biggest economy, was expected to present an EU number of 1.1% versus 1.2% last month.
Mixed signals expected for national growth rates
The lack of economic strength in the euro area remains a concern, and Tuesday’s report is unlikely to eliminate such worries. The quarterly growth rate for the first three months of this year is forecast at a meagre 0.1% after a flat reading in the final quarter of 2023. The annual growth rate for Q1 GDP is predicted at 0.2% following 0.1%.
The quartet of major economies in the Eurozone is set to release GDP growth data Tuesday before the number for the whole currency area is released. France (05:30 GMT) is expected to announce a quarterly rate of 0.1%, which would match the final three months of 2023. Spain (07:00 GMT) is forecast to show a slowdown to 0.4% from 0.6% in the final quarter of last year. Predictions for Germany (08:00 GMT) show an upturn to 0.1% from -0.3%. Italy (08:00 GMT) is expected to report growth of 0.1%, which would be less than the 0.2% in the three months prior.
Danske Bank noted, “We expect that the economy grew 0.2% q/q, driven by the service sector, while the manufacturing sector declined slightly as indicated by industrial production data and PMIs.”
- HICP forecast to hold at 2.4%
- Core rate set for drop to 2.6% (prev 2.9%)
- GDP to tick up to 0.1% q/q (prev 0%)
- Jump in inflation could impact June interest rate cut
- Data due Tuesday at 09:00 GMT / 11:00 CET
By Eric Culp, European Editor
LiveSquawk News
@EricCulpLS
29 April 2024 | 07:50 GMT
The headline annual inflation rate in the Eurozone is expected to hold steady this month, and the economy in the currency area likely showed a smidgen of growth last quarter, according to analysts.
An economists’ poll predicted that after three straight declines, headline annual inflation in the euro area held steady at 2.4%.
The core inflation rate is forecast to continue its slowdown with a drop to 2.6% from 2.9%.
“Inflation has declined in recent months, but the underlying momentum in service inflation has picked up,” wrote Danske Bank, whose predictions were in-line with the consensus. “The key thing to look out for is service inflation, which has gained momentum recently and remains sticky on the back of recent wage increases.”
Unless the latest inflation numbers are much higher than expected, the European Central Bank is unlikely to veer from its path toward interest rate cuts in June.
Euro-area big four to offer diverse inflation data
Consumer price growth in the Eurozone’s four largest economies often foreshadows the result for the currency area, and they are likely to send mixed signals this month. Spain, the fourth biggest economy, said Monday that its annual EU-harmonised inflation rate ticked up a tenth to 3.4% this month. Germany, Europe’s largest economy, was expected to announce a repeat of March’s 2.3% rate of EU-harmonsied consumer price growth on Monday afternoon.
France, the second-largest euro area economy, is to report Tuesday morning, with projections signalling a decline in the EU inflation rate to 2.2% from 2.4% in March. Italy, the third-biggest economy, was expected to present an EU number of 1.1% versus 1.2% last month.
Mixed signals expected for national growth rates
The lack of economic strength in the euro area remains a concern, and Tuesday’s report is unlikely to eliminate such worries. The quarterly growth rate for the first three months of this year is forecast at a meagre 0.1% after a flat reading in the final quarter of 2023. The annual growth rate for Q1 GDP is predicted at 0.2% following 0.1%.
The quartet of major economies in the Eurozone is set to release GDP growth data Tuesday before the number for the whole currency area is released. France (05:30 GMT) is expected to announce a quarterly rate of 0.1%, which would match the final three months of 2023. Spain (07:00 GMT) is forecast to show a slowdown to 0.4% from 0.6% in the final quarter of last year. Predictions for Germany (08:00 GMT) show an upturn to 0.1% from -0.3%. Italy (08:00 GMT) is expected to report growth of 0.1%, which would be less than the 0.2% in the three months prior.
Danske Bank noted, “We expect that the economy grew 0.2% q/q, driven by the service sector, while the manufacturing sector declined slightly as indicated by industrial production data and PMIs.”
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