- Capital Economics
Although inflation in the Euro zone rose in March, it remained in negative territory, underscoring the continued struggle faced by the ECB to boost inflation in the currency bloc closer to its medium-term target of just below 2%. Eurostat's flash estimate showed annual inflation in the Euro zone was minus 0.1% in March after negative 0.2% in February. Core inflation, a figure closely watched to assess underlying trends, climbed to 0.9% from 0.8%. The inflation increase is the latest in a string of slightly positive data for the 19-nation currency bloc, suggesting that the Euro zone's tepid domestic recovery remains on track despite headwinds from abroad. The ECB has been battling ultra-low inflation for years and unveiled an unexpectedly massive stimulus package this month, lowering rates deeper into negative territory, expanding monthly asset purchases by a third and offering free loans to banks. The ECB expects inflation to average just 0.1% this year before a pickup in 2017.
Meanwhile, the unemployment rate in Germany remained at a record-low level of 6.2% in March, with unemployed persons staying at 2.73 million. Moreover, German retail sales advanced 5.4% on an annual basis in February, a huge jump from the 1.2% decrease booked a month before. However, sales declined 0.4% month-on-month, following the 0.7% gain before.
© Dukascopy Bank SA