EZ Nov Inflation On The Soft Side Even With Updated Expectations

Eurozone flash inflation for November printed at 2.4% Y/Y (vs 2.7% cons; 2.9% prior) while core (ex-energy/food) was 3.6% Y/Y (vs 3.9% cons; 4.2% prior). Monthly NSA prints were -0.5% for headline and -0.6% for core.

• The national releases over the past two days will have revised initial analyst expectations lower, but a soft print in Italy (released alongside the EZ figure) will have meant even updated expectations were too high. We await the ECB's seasonally-adjusted series due out later today for a better indication of sequential momentum.
• Disinflation was seen in all major subcomponents. Analysts had expected an uptick in the Y/Y energy rate as base effects began to fade, but energy deflation was -11.5% Y/Y (vs -11.2% prior).
• Of the core components, non-energy industrial goods were +2.9% Y/Y (vs +3.5% prior) while services were +4.0% (vs +4.6% prior). Monthly NSA rates were negative for both (-0.1% for NEIG, -0.9% for services), with services likely dragged down by travel components (due to the high weighting of German package holidays).
• Between 2015 - 2022, November services inflation has averaged -0.8% M/M.
• Food inflation was 6.9% Y/Y (vs 7.4% prior), with disinflation limited by an uptick in unprocessed food prices as expected.
• At a country level, the November Y/Y prints were lower (or the same) in 18/20 countries (all other than Belgium and the Netherlands). On a monthly basis, 16 countries saw M/M NSA deflation.

Image legend:

• Dark Blue: All items
• Grey: Core ex-energy/food
• Light Green: NEIG
• Black: Energy
• Orange: Food
• Light Blue: Services