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EUROPEAN INFLATION: Key ECB Underlying Inflation Metric Remained At 2% in Nov

EUROPEAN INFLATION
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The ECB’s Persistent and Common Component of Inflation (PCCI) metric, which is regarded by staff as having the highest predictive power of medium-term inflation pressures, remained at 2% in November. The importance of this measure in providing the ECB confidence that inflation is returning to target was highlighted by Chief Economist Lane in today’s webcast with the MNI Policy Team.

  • President Lagarde also noted on Monday that recent progress in underlying inflation was a contributing factor in the decision to drop the ECB’s pledge to keep policy “sufficiently restrictive” in the December policy statement.
  • The “core” PCCI metric (i.e. excluding energy and food) softened 10bps in November to 1.85%.
  • The weighted median measure fully unwound the 30bp uptick seen in October, returning back to 2.4%. Meanwhile, the 10% trimmed mean measure rose 10bps to 2.3% and the 30% metric remained steady at 2.5%.
  • Supercore - a model based measure which picks out the items that are estimated to co-move with the business cycle – has shown more limited progress in recent months, held at 2.8% for the fourth consecutive month.  
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The ECB’s Persistent and Common Component of Inflation (PCCI) metric, which is regarded by staff as having the highest predictive power of medium-term inflation pressures, remained at 2% in November. The importance of this measure in providing the ECB confidence that inflation is returning to target was highlighted by Chief Economist Lane in today’s webcast with the MNI Policy Team.

  • President Lagarde also noted on Monday that recent progress in underlying inflation was a contributing factor in the decision to drop the ECB’s pledge to keep policy “sufficiently restrictive” in the December policy statement.
  • The “core” PCCI metric (i.e. excluding energy and food) softened 10bps in November to 1.85%.
  • The weighted median measure fully unwound the 30bp uptick seen in October, returning back to 2.4%. Meanwhile, the 10% trimmed mean measure rose 10bps to 2.3% and the 30% metric remained steady at 2.5%.
  • Supercore - a model based measure which picks out the items that are estimated to co-move with the business cycle – has shown more limited progress in recent months, held at 2.8% for the fourth consecutive month.