Accelerating Euro-Area Inflation Masks Slow Core Reading: Chart

(Bloomberg) -- While euro-area inflation probably accelerated in March, primarily driven by a base effect linked to food and non-alcoholic beverages, the core figure, which excludes those volatile items, should be steady, according to Bloomberg Economics’ David Powell and Jamie Murray. Still, underlying inflation is likely to accelerate eventually because the economy has “almost completely healed from the euro crisis and the erosion of spare capacity,” they say. “The expectation for those price pressures from the labor market to increase should be enough for the European Central Bank to continue paring back its monthly asset purchases.”

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