FXStreet (Barcelona) - The KBC Bank Research Team expects Eurozone inflation to pick up in the second half of the year by strengthening domestic demand, weaker euro and from the positive base effects resulting out of last year’s drop in commodity prices.

Key Quotes

“While headline inflation picked up further in March, although remaining negative for now, core inflation remains stuck at its record low. For now, there are no signs that strengthening domestic demand is starting to push prices up in the euro area and also the weaker euro is not yet having a meaningful impact on inflation.”

“In April, inflation might remain volatile, due to the timing of Easter and the Easter holidays. Afterwards, we hope to see inflation picking up supported by strengthening domestic demand and the weaker euro. This should also start to push core inflation off its record low.”

“In addition, in the second half of the year, the headline inflation rate will be lifted significantly by positive base effects stemming from last year’s drop in oil and other commodity prices.”