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EUROPEAN INFLATION: PCCI Eases Slightly In January

EUROPEAN INFLATION
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The ECB’s persistent and common component of inflation metric fell 5bp to 2.11% in January, still slightly above the 2024 average of 1.97% but broadly in line with the 2% inflation target. The data should support Governing Council dove’s confidence in the inflation outlook, even as domestic spot inflationary pressures remain evident. 

  • PCCI is the ECB’s preferred measure of medium-term inflation pressures, and is constructed “by estimating a dynamic factor model that extracts the persistent and common component of inflation from granular price data at the item-country level”.
  • Core PCCI (i.e. excluding energy and food) was little changed at 1.90%, while Supercore (“which picks out those items that are estimated to co-move with the business cycle”) eased a tenth to 2.7%.
  • The weighted median metric saw a notable 3 tenth increase to 2.8% for its highest since May 2024. Meanwhile, the 10% and 30% trimmed mean series were each 2.5% Y/Y. 
ecb-underlying_jan
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The ECB’s persistent and common component of inflation metric fell 5bp to 2.11% in January, still slightly above the 2024 average of 1.97% but broadly in line with the 2% inflation target. The data should support Governing Council dove’s confidence in the inflation outlook, even as domestic spot inflationary pressures remain evident. 

  • PCCI is the ECB’s preferred measure of medium-term inflation pressures, and is constructed “by estimating a dynamic factor model that extracts the persistent and common component of inflation from granular price data at the item-country level”.
  • Core PCCI (i.e. excluding energy and food) was little changed at 1.90%, while Supercore (“which picks out those items that are estimated to co-move with the business cycle”) eased a tenth to 2.7%.
  • The weighted median metric saw a notable 3 tenth increase to 2.8% for its highest since May 2024. Meanwhile, the 10% and 30% trimmed mean series were each 2.5% Y/Y. 
ecb-underlying_jan