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Prior +1.7%Core CPI +2.4% vs +2.4% y/y prelimPrior +2.2%No changes to the initial estimates with the country breakdown seen below. The main sticking point remains services inflation, which is seen at 3.4% in February. That is up slightly from 3.2% in January, reaffirming more stubborn price pressures in general. Food price inflation was also elevated at 2.5% and has been keeping thereabouts since October last year.The mix of the two is what is still keeping the ECB very much guarded, even before the latest energy price (natural gas especially) surge in Europe amid the US-Iran conflict. The latest development has now even tilted the balance of the scales in favour of a rate hike for later this year.For now, the ECB is still dismissing that idea somewhat but you can bet that they will have to keep their options open. That especially not to repeat the same “transitory” mistake that they did back in 2021-22.
This article was written by Justin Low at investinglive.com.
💡 DMK Insight
Core CPI holding steady at 2.4% signals persistent inflation, and here’s why that matters: With services inflation creeping up to 3.4%, traders need to brace for potential volatility in both the forex and crypto markets. This stubborn inflation could prompt central banks to maintain or even tighten monetary policy, impacting interest rates and, consequently, asset valuations. If inflation expectations rise, we might see a stronger dollar, which typically pressures crypto prices. Keep an eye on the 2.4% level as a benchmark; any upward revision could trigger a sell-off in risk assets. The broader market context suggests that traders should watch for reactions from institutional players, particularly in the forex space, as they adjust their positions based on these inflation indicators. On the flip side, if inflation stabilizes or decreases, it could provide a short-term boost to risk assets, including cryptocurrencies. So, monitor the upcoming economic reports closely, especially any shifts in services inflation, as they could dictate market sentiment in the coming weeks.
📮 Takeaway
Watch the 2.4% Core CPI level closely; any upward revision could lead to a stronger dollar and pressure on crypto prices.
