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Core HICP Jump Adds Pressure to Eurozone Core Print

ITALY DATA
MNI (London)

ITALY DEC FLASH HICP +0.2% M/M (=FCST); NOV +0.6% M/M

ITALY DEC FLASH HICP +12.3% Y/Y (=FCST); NOV +12.6% Y/Y

  • Italian harmonised CPI matched expectations in the prelim December print, with prices edging up by +0.2% m/m, whilst cooling by 0.3pp to +12.3% y/y.
  • Softer energy and food inflation drove the decline in headline CPI from the October-November peak of +12.6% y/y.
  • Eurozone CPI is seen softening for a second month running, cooling to +9.5% y/y in the December flash due on Friday. Downside surprises across German, French and Spanish data suggest a softer print is a likely outcome though.
  • Yet the 0.3pp core CPI acceleration to +6.4% y/y in today's flash Italian data will be grounds for concern as attention shifts to Friday's core eurozone CPI print, and whether it shifts from +5.0% y/y. The Italian uptick alongside the latest Spanish core jump and upticks in German state core inflation provide evidence for core CPI remaining elevated in December.

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