ABN AMRO's Senior Economist Bill Diviney reports that Eurozone inflation rose to 2.5% year-on-year in March, up from 1.9% in February, primarily due to higher petrol and energy prices. This figure was in line with ABN AMRO's forecast but slightly below the consensus estimate of 2.6% [1]. Meanwhile, core inflation eased to 2.3%, also matching ABN AMRO's forecast and coming in below the consensus of 2.4% [1].
Diviney anticipates that inflation will continue to rise, peaking above 3% in the coming months as energy and later food prices feed through. The projections are based on pre-Iran conflict dynamics and assume ongoing energy disruptions, with the base case expecting severe energy disruptions to last until the end of May [1]. Specifically, ABN AMRO forecasts a further jump in inflation to 2.9% in April and above 3% in May [1].
An additional upward pressure on inflation is expected from food prices, which are likely to be impacted by rising fertilizer costs [1]. Diviney notes that the March rise in inflation marks the beginning of a sustained pickup over the coming months [1].
No explicit market reactions or analyst opinions regarding asset prices or central bank policy are mentioned in the article. The focus remains on the inflation trajectory and its drivers.
CONCLUSION
Eurozone inflation is projected to continue rising, with ABN AMRO forecasting a peak above 3% by May due to ongoing energy disruptions and anticipated increases in food prices. The March inflation data signals the start of a sustained upward trend. Market participants should monitor energy and food price developments closely as they will be key drivers of inflation in the coming months.