© Reuters. BofA cuts eurozone inflation estimates
Analysts at Bank of America cut their euro zone inflation forecasts in a note on Tuesday following recent market price movements and the latest inflation figure.
Analysts at the bank said the firm now forecasts headline inflation will average 5.5% in 2023, 2.3% in 2024 and 1.4% in 2025, up from 5.6%, 2.6%. % and 1.4%, respectively.
“The downward revision (and further below consensus) is mainly due to falling energy prices. We now expect core inflation to be 4.9% in 2023, 2.5% in 2024 ( both 10 bp less) and, still, 1.8% in 2025.”, the analysts revealed.
“We expect inflation to fall below target in August 2024. Core inflation is likely to get there with a slight delay in 4Q24,” the analysts added. “We still expect, as has been the case for a long time, significant below-target inflation in 2025 driven by a lack of adequate excess demand and a central bank that has probably gone too far.”
However, focusing on the short term, BofA believes inflation will likely rise in December and January, driven by base effects from energy prices. The bank expects eurozone inflation to be 3% year-on-year in December, with core inflation to drop to 3.4% year-on-year.
“France's HICP should be 4.3% year-on-year, Germany's 4.0% year-on-year and Italy's 0.4% year-on-year,” the analysts said.
