Tomorrow’s eurozone CPI data will be a prime example of market expectations deviating from the economist consensus.

The consensus is for a 0.8% y/y rise in CPI and core prices rising 1.0% y/y. After the miss in German CPI the market will have priced in a downside miss. But how much?

The eurozone is much larger than just German but it’s a flash estimate and based on limited data. I’d expect the market to now be pricing in a tick lower in the headline number but core expectations at 1.0% y/y are probably unchanged.

eurozone CPI

Eurozone CPI – April exp at 0.8%

The ECB has been blaming soft CPI readings on energy and a late Easter holiday and even if the numbers are inline with estimates, it still keeps a June rate cut on the table. In order for the ECB to cut in May, we would need to see a miss of at least 0.2 percentage points.