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Inflation holds steady in eurozone's biggest economies

By Abigail Townsend

Date: Thursday 14 Mar 2019

Inflation holds steady in eurozone's biggest economies

(Sharecast News) - Inflation in Germany, Europe's biggest economy, was largely steady last month, despite higher food and energy prices.
According to the country's Federal Statistical Office, headline inflation was 1.5% year-on-year in February, compared to 1.4% in January but a marginal downward revision on the initial estimate of 1.6%.

The annual inflation rate, which is measured by harmonized European Union standards, held steady at 1.7%. The rate was 1.7% in both January and December.

Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, said: "Higher food and energy inflation were the primary drivers of the headline increase." Food inflation rose to 1.4%, from 0.8% in January, while energy prices were ahead 2.9%.

Vistesen added: "Assuming the current level of oil prices is sustained through March, energy inflation will increase a bit further this month before falling back, thanks mainly to base effects.

"Looking ahead, the Easter effect looms for the March and April data. We think services inflation will fall sharply in March, dragging the core and headline lower, before storming back in April. Overall, we think a trend in German core inflation of 1.6% is a decent bet for the rest of the year, but volatility on a monthly basis is a guarantee."

In France, the 12-month harmonized inflation rate was 1.6%, which was revised up an initial estimate of 1.5% and higher than January's 1.4%, according to the National Institute of Statistics and Economic Studies. Underlying inflation, which strips out volatile elements such as energy, remained at 0.7% for the fourth consecutive month.

Vistesen said: "The French core rate should push closer to 1% in the next six-to-nine months, but headline inflation likely will remain lower compared to the second half of last year, offering a key boost to consumers' purchasing power."

Spain's inflation figures on Tuesday showed the annual rate remained at 1.1% and Italy's CPI is due on Friday.

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