EUROPEAN INFLATION
Italian September flash core HICP inflation saw a notable deceleration to 1.8% Y/Y (vs 2.3% prior), with both services and non-energy industrial goods easing on an annual basis.
- Although services inflation fell three tenths to 3.1% Y/Y, it remains within this year’s tight 3.1-3.4% range. A 2.1% M/M and 2.2% Y/Y fall in transport inflation was an important driver here, though restaurant and hotel and recreation and culture prices also eased on an annual basis.
- Services expected prices saw a sizeable fall to 3.6 (vs 7.1 prior) in the European Commission’s September survey.
- Non-energy industrial goods (“core goods”) entered deflationary territory for the first time since July 2021 at -0.2% Y/Y (vs 0.3% prior), despite an uptick in retail and industry expected prices in the September EC survey.
- Core goods inflation rose 5.3% M/M, driven by a 24.2% M/M rise in clothing and footwear prices (following the conclusion of the summer sales period). This was nonetheless smaller than the 5.8% M/M rise seen in September 2023.
- Headline inflation was in line with consensus at 0.8% Y/Y (vs 1.2% prior), with deepening energy deflation (-8.7% Y/Y vs -6.2% prior) offsetting a small rise in food inflation (1.6% vs 1.3% prior).
- We will provide a full EZ inflation tracking estimate after the German national data at 1300BST. We have noted marginal downside risks to the 1.7% Y/Y German CPI consensus following the state-level data this morning.
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