There was a modest upward surprise in Eurozone headline and core inflation in February’s flash estimate (headline 2.4% Y/Y vs 2.3% consensus; core 2.6% vs 2.5% cons).
However, the ECB is likely to be encouraged by the moderation in the year-over-year services inflation rate, slowing to 3.7% for its joint slowest pace since June 2022.
Although the seasonally adjusted services inflation data remains somewhat firm, the more dovish members of the Governing Council are likely to view February’s figures as a positive sign that underlying inflation pressures are easing.