Increasing evidence shows that Q2 GDP growth should remain quite subdued. Inflation came out at +2% y/y in May, the first time since August 2012 it reached the 2%-threshold. The picture for wage growth is quite different: it grew by just +1.4% y/y in Q1 2018, compared to +2.2% in Q3 2012. As a result, household purchasing power is likely to show weak growth in H1 2018, after an already mere increase of +0.2% q/q in Q4 2017. Obviously, the inflation rise in May was driven by a genuine oil price increase (benchmark Bent reached on average 77 USD/bbl in May). This is bad news for corporate margins since selling prices have not increased as well, in particular in the manufacturing sector where prices grew in February for the first time in the last five 5 years but returned to deflationary territory in March (-0.2% y/y in May). These divergent price tags between the consumer and the corporates are bad signals for Q2 growth. We expect +0.3% q/q (after +0.2% in Q1), and +1.8% for 2018 as a whole.
