Analysts Eye German Inflation Data Distortions

A few more sell-side takes on November Eurozone HICP after today's national data (recall consensus for headline Y/Y is 2.7% / core 3.9%):

• Nomura entered the day projecting 2.6% headline / 4.0% core, and maintains its headline expectation though currently "nowcasts" a 3.8% core rate.
• JPMorgan sees headline eurozone HICP at 2.6%, unch from prior to today's data, but notes upside potential for the core reading from their existing forecast of 3.8%. That's based on the German data.
• They write that the difficulty is translating the German CPI data into HICP given the drag from the weighting distortion in package holidays - which should drag down core inflation - being offset by a new German stats agency methodology to record package holiday prices, which made the Nov 2023 price fall smaller than in Nov 2022. This in their view explained the upward surprise in German inflation vs their forecasts.
• Re the latter, Barclays said similar, suggesting that while the German headline print was below expectations, the package holidays outturn was stronger than they had forecast.