EGBS: Bunds Off Session Lows But A Bearish Theme Still Intact

The details of the March Eurozone flash HICP print confirm a pronounced energy pick-up but also show that any wider feed-through to other aggregates was not really notable yet.

• Energy's 4.93% Y/Y represents a pronounced pickup from February's -3.12% amid a 6.80% sequential print, but was likely a little lower than market expectations ahead of the national releases (we've seen a couple analysts looking for a high 5 handle in March). This was the highest rate in the category since February 2023.
• Services remained within recent ranges at 3.23% (3.36% February) with the typical question for the final data on the underlying drivers here - the direction of travel for volatile travel-related categories remain a little uncertain so far (German airfares seemed high yesterday).
• Non-energy industrial goods tapered off a little in March, to 0.47% Y/Y, remaining subdued as in recent months. The question here will be if higher logistics prices for producers driven by higher energy will filter through to upside price pressures in the months ahead.
• This left core HICP at 2.26% Y/Y, below February's 2.41% but also within recent ranges.
• Food / alcohol / tobacco inflation meanwhile was 2.35% Y/Y, down from 2.51% in February and the lowest rate since July 2021.

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