Annual CPI inflation retreated to 5.3% in Mar-23 from a 8.1% inflation in previous month, mainly due to price reductions in transport and healthcare categories. Core inflation (non-food, non-energy, and non-tobacco) also reduced to 5.0% (-1.6ppts m/m) in March.

By categories, annual inflation was mostly driven by price changes in food and non-alcoholic beverages (+11.8% y/y, 3.91ppts), housing, water, electricity, gas and other fuels (+11.1% y/y, 1.15ppts), transport (-8.0% y/y, -1.00ppts), healthcare (-9.1% y/y, -0.92ppts), alcoholic beverages and tobacco (+7.2% y/y, 0.48ppts) and restaurants and hotels (+12.4% y/y, 0.47ppts), categories.

On a monthly basis, there was a 0.2% deflation in Mar-23, driven by price reduction in transport (-2.3% m/m, -0.27ppts) category. As inflation deceleration is expected to continue in coming months, we believe that the NBG will begin monetary easing from June 2023 (we also do not rule out the possibility of the first rate cut occurring on May meeting).

We revised our annual inflation forecast downwards to 4.7% for 2023 from the previous forecast of 5.2%.