EUROPEAN INFLATION
Eurozone services inflation momentum was soft in November, with prices falling 0.07% M/M on a seasonally adjusted basis using ECB data (vs an increase of 0.34% in October). This was the lowest sequential SA services price growth since April 2021.
- A reminder that the NSA annual services print was 3.9% Y/Y, below MNI’s median consensus of 4.1% Y/Y. Given that many analysts had expected services inflation to accelerate on base effects in November, we had suspected that underlying momentum was on the soft side.
- On a 3m/3m saar basis, services momentum fell to 2.63% (vs 3.45% prior), its lowest of 2024.
- Non-energy industrial goods price growth also remained subdued at 0.11% M/M (vs 0.04% prior), with momentum falling to 0.66% 3m/3m saar (vs 0.82% prior).
- This allowed core inflation momentum to fall below 2% for the first time since January, at 1.91% (vs 2.50% prior).
- Although no sub-component details are provided in the flash release, this data will be seen as a dovish signal by ECB policymakers. It is probably not enough to support a 50bp cut next month (OIS markets price 28bps of easing) but should support the case to remove the pledge to keep policy “sufficiently restrictive” until inflation reaches the 2% target.
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