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Strong Headline Disinflation Again

BELGIUM

Belgium (4% of Eurozone HICP) saw another month of strong disinflation in October. HICP was -1.7%% Y/Y (vs +0.7% prior) while CPI was +0.36% Y/Y (vs +2.39% prior); +0.34% M/M.

  • Core CPI (ex-energy/unprocessed foods) saw a more muted disinflation to +6.55% Y/Y vs +6.95% prior (and an +8.7% peak in May).
  • Following September's surprisingly sharp fall in HICP Y/Y, October's flash print brought the index into deflationary territory while CPI also saw a sizeable 2pp fall Y/Y. Given that Belgium has the 6th highest weighting in the Eurozone HICP basket at 4%, the fall in HICP will once again have had a meaningful impact on the aggregate print. However, the more muted core CPI print is unlikely to help the EZ-wide core HICP too much.
  • The headline reading was dragged down by energy base effects, with Y/Y energy prices -37.15% (vs -28.73% prior), while food prices were +8.98% Y/Y (vs +11.15% prior). Services continued with a slow downward trajectory, printing at +7.09% Y/Y (vs +7.18% prior).
  • On a monthly basis, clothing, private rents and meats contributed the most to the upside, while alcoholic and non-alcoholic beverages, liquid fuels and electricity were the largest downside drivers.

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