The February CPI came in spot on the market consensus of 1.9% y/y, and the market was reluctant to react even though January inflation was revised down to 1.6% y/y (from 1.7%) due to the change in composition of the basket (which of course meant that the February CPI was in fact slightly higher than the old-basket-based expectations). As for the basket itself the revision was not really surprising - the share of food was revised down by 1 percentage points to 26.2% while leisure and clothing received an extra 0.8 pp.
The changes had a marginal impact on the headline figure, although they did have one interesting implication - according to our estimates under the new basket composition the January core CPI dropped to 1.6% y/y (from 1.7% in December) and inched up to slightly below 1.7% y/y in February, which might also help explain the reason for the muted reaction from the market to the higher than expected m/m increase in headline inflation.
With the CPI all over headlines the batch of second-tier data was also ignored by the market – the current account deficit came in higher (at EUR -678 m) than the market consensus and our expectations and the trade balance disappointed as well (EUR -387 m) with the revival in exports still somewhat softer than we had expected. M3 money supply growth moderated slightly as well, but the breakup of the data showed that both household deposit and credit growth reached new multi year highs as did corporate borrowing and lending.