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PCCI Uptick Underscores Need For "More Confidence" In Return To 2%

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The ECB's favoured underlying inflation metric saw a second consecutive uptick in February.

  • Overall PCCI (persistent/common component) was 2.13% Y/Y (vs 1.94% prior), while PCCI ex-energy/food was 2.05% Y/Y (vs 1.89% prior).
  • It is still too early to tell whether the Jan/Feb PCCI data signifies a reversal in underlying inflation momentum. Prior to the last two upticks, the PCCI ex-energy/food measure declined for 10 consecutive months from a peak of 4.00% Y/Y.
  • Nonetheless, the data will be viewed alongside similar rises in core/services inflation momentum in February, underscoring the ECB's need for "more confidence" that inflation is sustainably on its way to the 2% target before easing policy rates.
  • This supports the apparent Governing Council consensus eyeing a first cut not before the June meeting, by when significantly more data on price pressures will be available.
  • Other ECB-calculated underlying inflation metrics nonetheless decelerated in February, with the 10% trimmed mean and weighted median measured printing below 3% for the first time in 28 and 25 months respectively.

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The ECB's favoured underlying inflation metric saw a second consecutive uptick in February.

  • Overall PCCI (persistent/common component) was 2.13% Y/Y (vs 1.94% prior), while PCCI ex-energy/food was 2.05% Y/Y (vs 1.89% prior).
  • It is still too early to tell whether the Jan/Feb PCCI data signifies a reversal in underlying inflation momentum. Prior to the last two upticks, the PCCI ex-energy/food measure declined for 10 consecutive months from a peak of 4.00% Y/Y.
  • Nonetheless, the data will be viewed alongside similar rises in core/services inflation momentum in February, underscoring the ECB's need for "more confidence" that inflation is sustainably on its way to the 2% target before easing policy rates.
  • This supports the apparent Governing Council consensus eyeing a first cut not before the June meeting, by when significantly more data on price pressures will be available.
  • Other ECB-calculated underlying inflation metrics nonetheless decelerated in February, with the 10% trimmed mean and weighted median measured printing below 3% for the first time in 28 and 25 months respectively.