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EUROPEAN INFLATION: Core Inflation Momentum Moderates In September

EUROPEAN INFLATION
CEEMEABulletGlobalFixed Income BulletsForeign Exchange BulletsRegionMarkets

The ECB’s seasonally adjusted September HICP data should further strengthen the ECB’s confidence in the inflation outlook, and support market pricing for a cut at next month’s meeting.

  • Core inflation momentum (measured as a 3m/3m SAAR) eased 20bps to 2.95%, with services momentum falling to 4.06% (vs 4.39% prior).
  • This was the fourth consecutive monthly fall in services momentum, which is down from a YTD high of 5.29% in May.
  • On a sequential basis, services prices rose 0.15% M/M in September (vs 0.35% in August and 0.34% in July).
  • While 0.15% M/M is “consistent” with the 2% target on an annualised basis, SA services prices were likely pulled lower by the unwinding of Olympic-related effects in France (air fares and accommodation price falls were noted by Insee). As such, there will probably be some sequential re-acceleration from next month.
  • Non-energy industrial goods (“core goods”) momentum accelerated to 1.09% (vs 0.93%), but sequential price growth was just 0.01% M/M (as in August).
  • The momentum series nonetheless underscores analyst expectations for a modest rise in core goods inflation in the months ahead.

 

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The ECB’s seasonally adjusted September HICP data should further strengthen the ECB’s confidence in the inflation outlook, and support market pricing for a cut at next month’s meeting.

  • Core inflation momentum (measured as a 3m/3m SAAR) eased 20bps to 2.95%, with services momentum falling to 4.06% (vs 4.39% prior).
  • This was the fourth consecutive monthly fall in services momentum, which is down from a YTD high of 5.29% in May.
  • On a sequential basis, services prices rose 0.15% M/M in September (vs 0.35% in August and 0.34% in July).
  • While 0.15% M/M is “consistent” with the 2% target on an annualised basis, SA services prices were likely pulled lower by the unwinding of Olympic-related effects in France (air fares and accommodation price falls were noted by Insee). As such, there will probably be some sequential re-acceleration from next month.
  • Non-energy industrial goods (“core goods”) momentum accelerated to 1.09% (vs 0.93%), but sequential price growth was just 0.01% M/M (as in August).
  • The momentum series nonetheless underscores analyst expectations for a modest rise in core goods inflation in the months ahead.