The latest ECB Survey of Professional Forecasters (SPF) showed unchanged projections for headline inflation for 2018, 2019 and 2020. But Core inflation, excluding food and energy forecasts were revised slightly lower. Also, expectations for real GDP growth were also revised lower.
Headline inflation is projected to be at 1.7% in 2018, 1.7% in 2019 and 1.7% in 2020, unrevised. Core inflation is projected to be at 1.1% in 2018, 1.4% in 2019 and 1.7% in 2020, revised slightly down. ECB noted “he expected pick-up in underlying inflation remained underpinned by a pick-up in annual growth in compensation per employee, which was expected to increase to 2.3% by 2020.” The convergence with between headline and core inflation is still a development that’s welcomed by the ECB.
GDP growth is projected to be at 2.0% in 2018, 1.8% in 2019 and 1.6% in 2020. There were downward revision of -0.2% for 2018 and -0.1% for 2019. ECB noted “respondents typically attributed their revisions to external factors such as higher energy prices weighing on disposable income, with many also noting that they had now incorporated into their baseline forecasts at least some dampening impact on exports and investment due to increased uncertainty surrounding the outlook for world trade. ”
