ABN AMRO's Senior Economist Bill Diviney notes Eurozone inflation rose to 2.5% year-on-year in March, driven mainly by higher petrol and energy prices, while core inflation eased to 2.3%. Diviney expects inflation to continue rising, peaking above 3% in the coming months as energy and, later, food prices feed through. These projections reflect pre-Iran conflict dynamics and assume ongoing energy disruptions.

Inflation seen peaking above 3 percent

"Eurozone inflation jumped in March to 2.5% y/y from 1.9% in February, in line with our forecast but a touch below consensus (2.6%). Core inflation in contrast moderated to 2.3%, in line with our forecast but also below consensus (2.4%)."

"All of this reflects pre-Iran conflict inflation dynamics and we are likely to see a renewed pickup in these categories as the year progresses."

"The March rise in inflation is likely the beginning of a sustained pickup in inflation over the coming months."

"Our base case – which sees severe energy disruptions lasting until the end of May – is for a further jump in inflation to 2.9% in April, and above 3% in May."

"An additional source of upward pressure is likely to eventually come from food prices, which will be impacted by the rise in fertiliser costs."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)