MNI BRIEF: Core Inflation Underlines Case For ECB March Hike

Eurozone headline inflation slowed again in February, but an above-expectations increase in core prices will cement the case for the European Central Bank's expected 50 bps hike in March and reignite the possibility of a further 50 bps in May.

The latest data from Eurostat, published Thursday, showed headline inflation slowed to 8.5% in February, but core prices, excluding energy, food, alcohol and tobacco, rose 5.6% Y/Y, up from 5.3% in January.

Policymakers are becoming more focused on higher core prices, with growing concern that higher inflation will lead to higher wages, which in turn, will cement higher prices across the economy. (MNI INTERVIEW: German Wages, Gov't Spending, To Fuel Inflation)

Earlier on Thursday, ECB President Christine Lagarde noted the broadening of inflation pressures across the economy, although she added that base effects will start to lower prices on an annual comparison from March.