- Standard & Poor's
German inflation unexpectedly turned positive in March, a sign that domestic demand as well as ECB massive stimulus may be starting to boost price gains. Measured on an annual basis, German CPI rose 0.3%, exceeding forecast for a 0.1% gain and following zero growth in February. German prices, harmonised to compare with other European countries, climbed 0.1% on the year after declining by 0.2% in February. Before the German data, economists had projected that the Euro area's inflation was at minus 0.1% in March, up from a minus 0.2% in February. Eurostat will publish figures later in the day. In March, the ECB projected inflation in the region would accelerate to 1.3% in 2017 and 1.6 % in 2018.
The Euro zone economy is "flying on one engine," according to Standard and Poor's, which cut its growth and inflation forecasts for the region. The rating agency trimmed its growth projections from 1.8% to 1.5% this year and to 1.6% in 2017, citing a "sudden decompression" in the EU economy, which followed months of market turbulence between the end of 2015 and the beginning of 2016. Standard & Poor's also revised its headline inflation forecast to 0.4% for this year versus a previous 1.1% estimate. Inflation in the Euro zone is expected to reach 1.4% next year, slightly lower than the original 1.5% forecast.
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