Orbex analyst on the EU inflation: This leads me to believe that the lower-than-expected CPI figure is heavily attributed to the decline in energy costs

FXMAG.COM asked David Kindley to comment on the March Eurozone CPI. The print showed a noticeable decline of 1.6% coming in at 6.9%.

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David Kindley (Orbex): Europe’s latest Consumer Price Index (CPI) figures pointed to a considerable slowdown in inflation to its lowest level for more than a year, after a decline in energy costs. Specifically, consumer prices rose 6.9% in the year to March, down from 8.5% the previous month. The drop was sharper than consensus, resulting in an EU stock market rally on Friday, March 31^st. It should be noted however, that core inflation, which excludes energy and food costs, hit a new Eurozone high of 5.7% in March, up from 5.6% the previous month. Food price inflation also rose, from 15% to 15.4%, while services inflation was up from 4.8% to 5%. This leads me to believe that the lower-than-expected CPI figure is heavily attributed to the decline in energy costs. As demand for heating slows over the summer months, reining in on inflation will come down to the ECB’s next monetary steps and whether the Russia-Ukraine conflict is finally resolved by next winter.

Food price inflation also rose, from 15% to 15.4%, while services inflation was up from 4.8% to 5%

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