29th September 2016

Fidelity's Anna Stupnytska: German inflation accelerates further, Spain out of deflation

Anna Stupnytska, Global Economist at Fidelity International, comments on today’s inflation figures in Europe:

“Measures of inflation have picked up across Europe, with Flash German headline CPI accelerating further and Spain’s headline moving out of deflation (just) for the first time since 2014. Given positive base effects related to previous falls in energy prices, combined with the potential for higher oil prices in the coming months, especially if OPEC does manage to deliver production cuts, I expect headline inflation to continue accelerating at a moderate pace, with some benefits passing through to the core measure.

“While the euro area wide inflation remains at suppressed levels, the direction of travel is certainty positive and should be good news for Mario Draghi. In the environment of steady, if unspectacular, growth and accelerating inflation, the ECB will not need to provide much more additional easing, beyond a short extension of the current QE programme which currently runs out in March 2017. But given a heavy political timetable over the next few months, from the Italian referendum in December to French and German elections next year, the ECB will have to stand by ready to ease further in case of any related fallouts.”

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