Inflationary Pressures Build Across the Eurozone Delivering Modest EUR Support

It was a busy day on the Eurozone economic calendar on Wednesday. French consumer spending and inflation, German unemployment, and Eurozone inflation figures were in focus.

French Consumer Spending

In the month of February, French consumer spending stalled, following a revised 4.9% slide in January. Economists had forecast a 2% increase.

According to Insee.Fr,

• A 3.4% increase in the purchasing of manufactured goods was offset by a 3.1% fall in energy expenditure and a 2.2% decline in food consumption.
• Durable goods consumption increased by 2.3%, with clothing and textiles purchases up 15.8%.
• Milder temperatures contributed to a 3.5% fall in gas and electricity consumption. Fuel consumption fell by 2.5%.

French Inflation

Inflationary pressures ticked up in March, according to prelim figures.

According to Insee.Fr, the annual rate of inflation accelerated from 0.6% to 1.1%, supported by a 0.6% increase in consumer prices, month-on-month.  Consumer prices had stalled in February.

German Unemployment

In March, unemployment fell by 8K, following on from a revised 36k slide in February. Economists had forecast a 13k fall.

Germany’s unemployment rate held steady at 6.0%, which was in line with forecasts.

Eurozone Inflation

According to prelim figures, the Eurozone’s annual rate of inflation accelerated from 0.9% to 1.3%, which was in line with forecasts.

In March, Eurozone consumer pries increased by 0.9%, month-on-month, following a 0.2% rise in February.

Core inflationary pressures softened, however, with the core annual rate of inflation softening from 1.1% to 0.9%.

According to Eurostat,

• Energy is to have the highest annual rate in March (4.3% compared with -1.7% in February), based on prelim figures.
• Prices for services is to rise by 1.3% compared with a 1.2% increase in February.
• For food, alcohol, & tobacco, however, prices are to rise by 1.1% compared with 1.3% in February.
• Non-energy industrial goods are also expected to see prices rise at a slower pace in March, rising by 0.3% compared with 1.0% in February.

Other stats included prelim inflation figures from Italy. These stats had limited impact, however, as the markets awaited the Eurozone’s figures.

Market Impact

Ahead of the key stats of the day, the EUR had fallen to a pre-release and current day low $1.17041.

In response to today’s data dump, the EUR rose from $1.17225 to a post-stat and current day high $1.17479 before falling to a post-stat low $1.17215.

At the time of writing, the EUR was up by 0.09% to $1.17250.

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