Eurozone inflation for February : The worst is yet to come Eurozone inflation for February : The worst is yet to come Eurozone inflation for February : The worst is yet to come

Eurozone inflation for February : The worst is yet to come

Christopher Dembik

Head of Macro Analysis

Summary:  Inflation is still running hot in the eurozone. The headline is well-above the consensus in February, at 5.8 % year-on-year versus 5.3 % expected. The Eurostat report covers the period before the recent increase in energy prices related to the invasion of Ukraine by Russia. Therefore, inflation will likely jump more substantially in March, above 6 %. We estimate that the ongoing events in Eastern Europe will add one percentage point to inflation this year.

Eurozone inflation is up once more : Eurozone consumer price index (CPI) rose 5.8 % year-on-year in February after 5.1 % in January (see Chart), markedly above the market consensus of 5.3 %. Energy prices contributed substantially – they surged 31.7 % year-on-year in February after 28.6 % in January. Expect energy prices to continue rising in the short term due to the Ukrainian conflict. Oil prices stand now well-above the $100 threshold. The recent increase in wholesale oil and gas prices will be probably largely passed on to consumers in the coming months. Energy is not the only factor pushing inflation higher. Goods inflation is now at 3 % year-on-year. It will likely remain elevated at least for the first part of this year due to supply chain disruptions hitting food commodities. As a result, core CPI jumped too, from 2.3 % year-on-year in January to 2.7 % in February. The decrease noticed in January due to the German VAT effect is completely erased.

Inflation is jumping in all eurozone countries : Italy was a major reason for the strong rise in the eurozone inflation. The headline rose 6.2 % year-on-year, up from 5.1 % January. The marked rise in Italian inflation is in line with the results from other eurozone countries which had already reported their EU-harmonized inflation figures :

·         France to 4.1 % in February from 3.3 % in January

·         Germany to 5.5 % in February from 5.1 % in January

·         Spain to 7.5 % in February from 6.2 % in January

ECB dilemma : In the short term, we believe the ECB will hold off on policy move until Ukraine clarity. Next week’s Governing Council meeting will mostly focus on the impact of the conflict on inflation and financial stability. We estimate that the Ukraine conflict will add one percentage point to the eurozone inflation this year. The headline rate for March (first estimate released on 1 April) will be above 6 %, without any doubt. In the medium term, the combination between the green transition, the structural lack of investment in energy infrastructures and the troubled situation in Ukraine will constitute a new inflation shock that the ECB will need to address. Eurozone inflation is now uncomfortably high. This is not transitory anymore. Real income squeeze will be massive for the eurozone households. ECB's hawks have temporarily leaned towards the status quo because of the war. But once the geopolitical situation will be stabilized, they will certainly be very vocal in favor of a tightened monetary policy to fight inflation. Expect a heated debate within the ECB about the opportunity to raise interest rates earlier than anticipated.


The Saxo Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (
- Full disclaimer (

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo or its affiliates.

Saxo Capital Markets HK Limited
19th Floor
Shanghai Commercial Bank Tower
12 Queen’s Road Central
Hong Kong

Contact Saxo

Select region

Hong Kong S.A.R
Hong Kong S.A.R

Saxo Capital Markets HK Limited (“Saxo”) is a company authorised and regulated by the Securities and Futures Commission of Hong Kong. Saxo holds a Type 1 Regulated Activity (Dealing in Securities); Type 2 Regulated Activity (Dealing in Futures Contract); Type 3 Regulated Activity (Leveraged Foreign Exchange Trading); Type 4 Regulated Activity (Advising on Securities) and Type 9 Regulated Activity (Asset Management) licenses (CE No. AVD061). Registered address: 19th Floor, Shanghai Commercial Bank Tower, 12 Queen’s Road Central, Hong Kong.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products may result in your losses exceeding your initial deposits. Saxo does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo does not take into account an individual’s needs, objectives or financial situation. Please click here to view the relevant risk disclosure statements.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit

The information or the products and services referred to on this site may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and services offered on this website are not directed at, or intended for distribution to or use by, any person or entity residing in the United States and Japan. Please click here to view our full disclaimer.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc. Android is a trademark of Google Inc.