The May euro-area CPI inflation rate release, due on Tuesday, is expected to have accelerated to 0.1% y/y from 0.0% prior. Core CPI likely remained unchanged at 0.6% y/y. Headline CPI moved out of negative territory in April after four months. Although European Central Bank easing policies might have had a limited effect, the two factors likely contributing to this inflation pick-up are the recent sharp oil-price rise, and euro depreciation in the past year. The oil price in euro terms has risen about 50% since the trough in January. “We expect core CPI to begin accelerating around three months after headline CPI due to the lagged effect of low energy prices on non-energy good”, says Standard Chartered.In the medium term, a sustained period of above-trend growth is needed to shrink the spare capacity in the euro-area labour market.
The material has been provided by InstaForex Company – www.instaforex.com