• Prior +3.4%
• HICP +3.5% vs +3.5% y/y expected
• Prior +3.4%

There is a little bit of good news here as Spanish headline annual inflation comes in softer than estimated. That being said, the EU-harmonised reading did reflect a jump to 3.5% from 3.4% in the month before. So, one can argue that it is a bit mixed.

However, at least core annual inflation is seen pushing down a little to 2.8%. And that is softer than the 2.9% estimate seen in March previously. That being said, it still marks a notable increase in recent months with core annual inflation having been around 2.3% to 2.4% in the middle of last year.

Overall, the ECB still cannot rest on its laurels. Headline inflation is keeping higher and is expected to pick up further. And in turn, higher energy prices are expected to feed through to other parts of the economy in due time. That especially as the US-Iran conflict prolongs further.

But all things considered, I’m not a fan of central banks using monetary policy to fight back against supply shocks. So, the ECB definitely has their work cut out for them as they look to navigate through this landscape.