Big-Picture Snapshot

Drivers this month

• Energy: +0.42pp
• Food: +0.31pp
• Transport: +0.18pp
• Core goods: +0.13pp
• Services: +0.09pp

Policy pulse

March’s 1.2% MoM reading stands well above the European Central Bank’s price stability target, which is defined as a 2% YoY rate. The sharp monthly gain will intensify scrutiny of the ECB’s next moves, especially after several months of negative or flat readings.

Market lens

Bond yields jumped on the release, with the German 10-year bund yield rising 8 basis points intraday. Investors recalibrated expectations for rate cuts, as the inflation spike challenges the narrative of easing price pressures. Equity indices across the eurozone slipped, reflecting renewed caution.

Foundational Indicators

Historical context

• March 2026: 1.2%
• February 2026: 0.6%
• January 2026: 0.2%
• December 2025: -0.3%
• November 2025: 0.2%
• 12-month average: 0.09%

Comparative perspective

March’s print is the highest since late 2022, and more than double the prior month’s figure. The 12-month average remains subdued, but the recent upturn interrupts a period of negative or near-zero readings stretching back to December.

Data source and methodology

Figures are sourced from Eurostat and the Sigmanomics database[1]. The MoM inflation rate measures the percentage change in the harmonized index of consumer prices (HICP) from the previous month, seasonally adjusted.

Chart Dynamics

Forward Outlook

Scenario analysis

• Bullish: Inflation moderates to 0.4–0.6% MoM in coming months (20–30% probability), driven by easing energy costs and stable core prices.
• Base: MoM readings fluctuate between 0.7–1.0% (50–60%), as supply chain normalization is offset by persistent food and energy pressures.
• Bearish: Inflation remains above 1.1% MoM (15–20%), with further shocks in energy or geopolitical tensions amplifying price gains.

Risks and catalysts

Upside risks include renewed energy volatility and wage pressures. Downside risks stem from potential demand softening or policy tightening. The ECB’s communication and external shocks will shape the inflation trajectory in the months ahead.

Closing Thoughts

Market lens

Euro strengthened against major peers following the inflation release, as traders recalibrated expectations for monetary policy. The sharp MoM jump has revived debate over the timing and scale of future ECB actions. Market participants will closely watch April’s data for confirmation of a new inflation trend or a one-off spike.