Energy Base Effects Continue To Drag Headline Inflation Lower

Dutch flash HICP for December printed at +1.0% Y/Y (vs +1.2% cons; +1.4% prior) and +0.2% M/M (vs +0.3% cons; -1.5% prior). However, we note that the consensus was formed of just 3/4 analysts.

• National CPI also decelerated on an annual basis to +1.2% Y/Y (vs +1.6% prior). Excluding energy and motor fuels, CPI was +3.4% Y/Y (vs +4.2% prior and a peak of +8.1% in Feb/Mar 2023).
• Energy base effects once again drove the headline rate down, after prices peaked in October 2022. Energy inflation (including motor fuels) was -24.6% Y/Y (vs -25.3% prior). While still a drag on the annual rate, the print provides the first evidence of energy base effects beginning to fade in the Netherlands. However, the downward effect remains large in comparison to Germany and France, where the annual comparison saw energy inflation accelerate this month.
• Services inflation was steady at +4.1% Y/Y, while non-energy industrial goods and food inflation continued decelerating. NEIG was +1.1% Y/Y (vs +2.6% prior), while food, alcohol and tobacco was +5.3% Y/Y (vs +7.3% prior).