March 17, 2023 10:00 GMT
Feb HICP Confirmed, Q4 Labour Costs See Record Growth
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EUROZONE FEB FINAL HICP +0.8% M/M (JAN -0.2% M/M); +8.5% Y/Y (JAN +8.6% Y/Y)
EUROZONE FEB FINAL CORE HICP +5.6% Y/Y (JAN +5.3%Y/Y)
February final HICP data confirmed the flash release of a +0.8% m/m and +8.5% y/y for the eurozone. This was a modest -0.1pp deceleration on the January Y/Y print, signalling four months of cooling headline inflation.
- Despite the 5.2pp deceleration in energy to +13.7% y/y, non-energy industrial goods edged up 0.1pp to +6.8% y/y and services jumped 0.4pp to +4.8% y/y in February.
- Nominal labour costs jumped 2.0pp to +5.7% y/y in Q4 data released this morning. This is a record high quarterly y/y increase for the bloc, outpacing the Q1 2008 increase of +5.1% q/q.
- Upwards wage pressures alongside confirmation of the +0.3pp acceleration in core HICP to a euro-area high confirms that the ECB continues to face sticky inflationary pressures. Inflation "too high for too long" underpinned the hawkish 50bp hike yesterday (in line with MNI expectations) despite a backdrop of financial market strain.
- Looking forward, the ECB's March macroeconomic projections anticipate HICP to average +5.3% in 2023, 1.0pp lower than expected in December as energy prices are subsiding more quickly. Core inflation is expected to average 4.6% in 2023 (up 0.4pp from December), easing to 2.5% in 2024.
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