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EUROZONE DATA: Moderation In ECB Underlying Inflation Metrics In April

EUROZONE DATA
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The ECB’s underlying Eurozone inflation metrics moderated in April. In particular, PCCI ex-energy and food – the ECB’s preferred measure of medium-term inflation pressures – fell back below 2% to 1.86% Y/Y (vs 2.02% prior).

  • The headline PCCI index also moderated a tenth to 1.88% Y/Y.
  • Other underlying metrics (e.g. weighted median, trimmed mean and supercore) continued their downward trajectory, with supercore the only series still tracking above 3% Y/Y (3.1% in April vs 3.4% prior).
  • A June ECB cut appears all but inevitable at this stage, but further underlying inflation readings such as the above (i.e. PCCI showing no signs off reacceleration, other metrics continuing to moderate) should offer support to market pricing for two additional cuts in the remainder of 2024 (in addition to June).
  • Of course, the ECB will judge these metrics alongside the full Q1 national accounts, which will be released on June 7 (the day after the June 6 ECB meeting) and will contain key information on the GDP deflator and its components.
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The ECB’s underlying Eurozone inflation metrics moderated in April. In particular, PCCI ex-energy and food – the ECB’s preferred measure of medium-term inflation pressures – fell back below 2% to 1.86% Y/Y (vs 2.02% prior).

  • The headline PCCI index also moderated a tenth to 1.88% Y/Y.
  • Other underlying metrics (e.g. weighted median, trimmed mean and supercore) continued their downward trajectory, with supercore the only series still tracking above 3% Y/Y (3.1% in April vs 3.4% prior).
  • A June ECB cut appears all but inevitable at this stage, but further underlying inflation readings such as the above (i.e. PCCI showing no signs off reacceleration, other metrics continuing to moderate) should offer support to market pricing for two additional cuts in the remainder of 2024 (in addition to June).
  • Of course, the ECB will judge these metrics alongside the full Q1 national accounts, which will be released on June 7 (the day after the June 6 ECB meeting) and will contain key information on the GDP deflator and its components.