EUROPEAN INFLATION
Eurozone January flash HICP inflation came in slightly above consensus at 2.5% Y/Y (2.4% cons and prior) with Italy seemingly behind the surprise (released simultaneously at 1.7% Y/Y vs 1.4% cons). On a monthly basis, Eurozone inflation came in at -0.3% (-0.4% cons; 0.4% prior). However, the data on services in the release should be seen as a rather good sign regarding incoming disinflation.
- On an unrounded basis, HICP was 2.52% Y/Y and -0.28% M/M.
- Core HICP also printed slightly above consensus, at 2.7% Y/Y (2.6% cons but almost rounded to 2.7%; 2.7% prior; unrounded: 2.69% Y/Y, -0.96% M/M).
- Looking at the individual categories:
- Services inflation decelerated to 3.9% Y/Y (4.0% prior), which appears to be broadly what analysts expected. Sequential services inflation of -0.2% M/M is still stronger than what we'd typically see for a January in a pre-pandemic setting but nevertheless the softest January since 2020 - see chart. On first sight, this should be a good sign re the so-called January reset effect (see our HICP preview for background info), but we will have to await the final data for full details here.
- Energy accelerated as expected, to 1.8% Y/Y (0.1% prior) on the back of a 2.9% M/M sequential jump.
- Non-energy industrial goods inflation meanwhile remained at 0.5% Y/Y amid a seasonally driven -2.4% M/M sequential print.
- Food, alcohol and tobacco inflation decelerated a bit, to 2.3% Y/Y (2.6% prior).
- Looking at the national-level prints, headline HICP inflation accelerated in 10 countries in January vs Dec.
- Updated category weightings will be published alongside the final release on February 24.
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