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ECB's Underlying Inflation Metrics Decelerate In December

EUROZONE DATA

The ECB's underlying inflation metrics have been updated after the release of final Eurozone December HICP Wednesday morning, and they underscore the deceleration in core inflation to end 2023.

  • The overall PCCI (Persistent and Common Component of Inflation) index was 1.88% Y/Y (vs 1.99% in November, downwardly revised from 2.05% prior).
  • The updated PCCI ex-energy and food readings have now been below 2% for three consecutive months. The December print was 1.75% Y/Y (vs 1.77% in November, downwardly revised from 1.80% prior).
  • All other underlying metrics other than the 10% trimmed mean measure decelerated in December. While the 10% trimmed mean was steady at 3.5% Y/Y, we note that it had fallen the previous nine consecutive months, and is still 1.4pp below September's level.
  • A reminder that the uptick in December headline HICP was driven by energy subsidy-related base effects (especially in Germany), and is expected to be temporary. However, January will be an important month to see how HICP reacts to the annual weighting changes, and tax policy updates in certain countries.

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The ECB's underlying inflation metrics have been updated after the release of final Eurozone December HICP Wednesday morning, and they underscore the deceleration in core inflation to end 2023.

  • The overall PCCI (Persistent and Common Component of Inflation) index was 1.88% Y/Y (vs 1.99% in November, downwardly revised from 2.05% prior).
  • The updated PCCI ex-energy and food readings have now been below 2% for three consecutive months. The December print was 1.75% Y/Y (vs 1.77% in November, downwardly revised from 1.80% prior).
  • All other underlying metrics other than the 10% trimmed mean measure decelerated in December. While the 10% trimmed mean was steady at 3.5% Y/Y, we note that it had fallen the previous nine consecutive months, and is still 1.4pp below September's level.
  • A reminder that the uptick in December headline HICP was driven by energy subsidy-related base effects (especially in Germany), and is expected to be temporary. However, January will be an important month to see how HICP reacts to the annual weighting changes, and tax policy updates in certain countries.