Dec Core Remains Elevated As Headline Edges Lower

EUROZONE DEC FINAL HICP -0.4% M/M (FLSH -0.3%); NOV -0.1% M/M

EUROZONE DEC FINAL HICP +9.2% Y/Y (= FLSH); NOV % Y/Y

EUROZONE DEC FINAL CORE CPI +0.6% M/M, +5.2% Y/Y; NOV +5.0% Y/Y

• Eurozone final HICP was confirmed slowing by 0.9pp to +9.2% y/y in the final December data. The month-on-month fall in prices was revised 0.1pp lower to -0.4% m/m.
• This confirms a second consecutive month of slowing headline CPI, largely driven by lower energy prices which contributed around 1pp less to the headline print than in November.
• Yet confirmation of the +5.2% y/y record core CPI print implies that prices continue to accelerate in a broad-based manner. Service inflation was up +0.7% m/m alone, increasing 0.2pp to +4.4% y/y. As such, the December data sees continued pressure for the ECB to hike further to get a grip of core price pressures. At the December meeting, President Lagarde stated further 50bp hikes are expected.
• Construction data for November also released this morning saw a -0.8% m/m contraction, remaining a moderate +1.3% above November 2021 levels. The sector remains hampered by weak new orders, as high inflation and rising interest rates weigh further on investment demand.