October CPI Surges; Eurozone CPI Likely Steady Around 10%

ITALY OCT FLASH HICP +4.0% M/M, +12.8% Y/Y; SEP +1.6%r M/M, SEP +9.4% Y/Y

• Italian headline inflation surged by 4.0% m/m to a fresh euro-era record of +12.8% y/y, massively outpacing expectations of a more modest +1.4% m/m uptick and 0.5pp acceleration to +9.9% y/y.
• A monster jump in energy prices to +73.2% y/y ( from 44.5% in Sep) alongside an acceleration in food prices to to +13.1% (from +11.4% in Sep) drove the jump in the October print.
• The only slowing was seen on the recreational services front, which will largely reflect slowing tourism demand as the cost of living reduces spending.
• Core inflation remains a fraction of headline CPI, up 0.3pp at +5.3% y/y in October. Of concern here is the jump in good to +17.9% y/y (from +12.5% in Sep), implying that persistently high energy costs are feeding into broad-based inflation.
• This data alongside upside surprise in French CPI and the German state CPIs are more in line with the aggregate print holding steady around the +10% mark (versus earlier expectations of +9.5%).