The last time Europe had at least two consecutive months of deflation was in late 2014/early 2015 when the ECB launched its sovereign QE, and when prices staged a modest rebound into the rest of the year. One year later, it's more of the same, and as Eurostat revealed earlier today, after a headline price drop of -0.2% in February, March prices declined once more, this time by -0.1% in line with expectations, driven by a -8.7% plunge in energy prices.
The good news for the ECB, which earlier this month unleashed the first instance of corporate bond QE, is that if stripping out "volatile food and energy prices", core inflation accelerated in what Reuters dubbed mildly positive news for the European Central Bank as it struggles to revive anemic price growth.
As shown below, core inflation, a figure closely watched to gauge underlying trends, picked up to 0.9% from 0.8%, also in line with its recent trend and with expectations, alleviating some fears that low energy prices are feeding into the cost of other goods and services.
Credit to Zero Hedge
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