Euro area CPI inflation likely to stay at 0.3% y/y

June headline euro-area CPI inflation, due on Tuesday, is expected to remain 0.3% y/y. Core CPI inflation likely eased slightly to 0.8% y/y from 0.9% prior. Headline CPI inflation moved out of negative territory in April after four months. 

Although European Central Bank easing policies might already have had a limited effect, the two factors likely contributing to this inflation pick-up are the recent sharp oil-price rise, and euro depreciation in the past year. The oil price in euro terms has risen about 50% since the trough in January. 

"Medium-term, we expect significant inflation divergences between countries to emerge; for example, Germany has much less spare capacity than weaker countries such as France, Italy, and Spain, and therefore it may face inflationary pressures sooner",says Standard Chartered.