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EUROPEAN INFLATION: Slight Downside Risks To 2.3% Y/Y EZ Headline Consensus

EUROPEAN INFLATION
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There are slight downside risks to the 2.3% Y/Y consensus for Eurozone November flash headline HICP, with MNI currently tracking a print between 2.2-2.3% Y/Y based on national data released so far.

  • Both the German (2.4% Y/Y vs 2.6% cons) and French (1.7% Y/Y vs 1.8% cons) flash inflation figures printed below consensus in November. Meanwhile Spanish inflation was in line at 2.4% Y/Y and the Dutch data was a tenth stronger-than-expected at 3.8% Y/Y.
  • It is difficult to gauge how the 2.8% Y/Y core HICP consensus fares, given most national-level subcomponent breakdowns are for CPI and not HICP. However, we note an acceleration of services CPI inflation in France and the Netherlands, while services were sticky at 4.0% in Germany. Spanish core CPI was a little below consensus at 2.4% Y/Y (vs 2.6% prior) though.
  • The bar to a 50bp cut at next month’s ECB meeting appears higher than the market previously considered following the soft flash PMI prints
  • The MNI’s Policy Team’s latest sources piece suggested that a 2.2% Y/Y headline print in November could mean that such a move is “discussed”, but won’t firmly be on the table.
  • However, a soft print would make it more likely that the ECB considers dropping its pledge to keep rates “sufficiently restrictive” until it achieves its inflation target, which was also reported in our Policy Team’s latest piece. 
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There are slight downside risks to the 2.3% Y/Y consensus for Eurozone November flash headline HICP, with MNI currently tracking a print between 2.2-2.3% Y/Y based on national data released so far.

  • Both the German (2.4% Y/Y vs 2.6% cons) and French (1.7% Y/Y vs 1.8% cons) flash inflation figures printed below consensus in November. Meanwhile Spanish inflation was in line at 2.4% Y/Y and the Dutch data was a tenth stronger-than-expected at 3.8% Y/Y.
  • It is difficult to gauge how the 2.8% Y/Y core HICP consensus fares, given most national-level subcomponent breakdowns are for CPI and not HICP. However, we note an acceleration of services CPI inflation in France and the Netherlands, while services were sticky at 4.0% in Germany. Spanish core CPI was a little below consensus at 2.4% Y/Y (vs 2.6% prior) though.
  • The bar to a 50bp cut at next month’s ECB meeting appears higher than the market previously considered following the soft flash PMI prints
  • The MNI’s Policy Team’s latest sources piece suggested that a 2.2% Y/Y headline print in November could mean that such a move is “discussed”, but won’t firmly be on the table.
  • However, a soft print would make it more likely that the ECB considers dropping its pledge to keep rates “sufficiently restrictive” until it achieves its inflation target, which was also reported in our Policy Team’s latest piece.