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HICP Slows to 10.0% in Downside Surprise

EUROZONE DATA
MNI (London)

EUROZONE NOV FLASH CPI -0.1% M/M (FCST +0.2%); OCT +1.5% M/M

EUROZONE NOV FLASH CPI +10.0% Y/Y (FCST +10.4); OCT +10.6% Y/Y

EUROZONE NOV FLASH CORE CPI 0.0% M/M, +5.0% Y/Y (= FCST); OCT +5.0% Y/Y

  • Eurozone inflation saw a downside surprise in the November flash, deflating by -0.1% m/m and cooling by 0.6pp to +10.0% y/y in the headline print. Only Slovenia, Slovakia and Finland recorded higher November year-on-year rates.
  • Despite improvements in headline inflation, core CPI held steady at +5.0% y/y as anticipated. Prices stalled on the month at 0.0%.
  • Inflation has as such come off its October record high, supported by the -1.9% m/m fall in energy prices. This left annualised energy inflation 6.6pp lower at +34.9% y/y.
  • Food prices continued to accelerate, up +0.9% m/m (+13.6% y/y vs +13.1% in Oct), yet industrial goods held stable (+6.1%) and service prices fell by -0.3% m/m, easing by a marginal 0.1pp to +4.2% y/y.
  • Markets have downgraded the ECB terminal rates to closer to 2.8-2.9% in mid-2023 and are currently pricing around 56bp for the November rate decision. Yet the lack of easing in core inflation likely implies the decision between 50bp and 75bp could be on a knife's edge.

Source: MNI / Eurostat

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