EZ Headline Inflation Set To Show Slight Gain in June

- Headline inflation forecast at 0.2pct (prev 0.1pct)

- Core price growth seen at 0.8pct (prev 0.9pct)

- German inflation outpaces estimates

- Data due Tuesday at 09.00 GMT

 

 

By Eric Culp

European Editor, LiveSquawk News

@EricCulpLS

 

29 June 2020

 

Annual consumer price growth in the Eurozone is expected to have moved slightly higher in June on increased costs for energy, but inflation is projected to remain well below the European Central Bank’s target of near but below 2pct as countries in the single currency area attempt to restart their economies after from Covid-19 lockdowns.

 

Headline June inflation in the euro area is forecast to show an increase this month to an annual rate of 0.2pct from the 0.1pct reading in May on energy price growth.

 

Futures prices for West Texas Intermediate (WTI) crude turned negative in the latter part of April but were more than $7 higher on Monday than at the end of May.

 

The Eurozone’s core rate inflation rate is expected to move lower with a drop to 0.8pct from 0.9pct last month, according to economists.

 

“This headline ought to provide the first clear evidence of core inflation in a post-Covid-19 world; we expect a 0.2 percentage point decline, to 0.7pct,” said Claus Vistesen, chief Eurozone economist at Pantheon Macroeconomics.

 

Germany reports higher inflation

 

Germany, the largest economy in the single-currency area, said Monday that EU-harmonised consumer price growth rose a preliminary rate of 0.8pct compared to the 0.6pct estimate and May's final rate of 0.5pct.

 

Also on Monday, Spain, the Eurozone’s fourth-largest economy, reported a surprisingly strong increase in preliminary annual inflation to -0.3pct, which beat both the forecast of -0.5pct and the -0.9pct reading in May.

 

The first estimate of inflation from France, the Eurozone’s second-largest economy, is due early in Tuesday’s European trading session, and analysts are predicting an unchanged reading of 0.4pct. Preliminary annual inflation from Italy, the region's third-largest economy, is expected to hold at -0.3pct.

 

The ECB slashed its inflation projections for the next two years at the beginning of the month. The bank cut its consumer price growth forecast for the current year to 0.3pct from the March estimate of 1.1pct; inflation next year is expected to increase to 0.8pct, which was well below March’s prediction of 1.4pct.