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Upside Risks to Jan HICP Final Print

EUROZONE DATA
MNI (London)

The key focus for the European morning session will be the final print of Eurozone January HICP (1000 GMT / 1100 CET).

  • Consensus looks for a one tenth increase from +8.5% y/y to +8.6% y/y. This would nonetheless imply a 0.6-0.7pp deceleration from December. We look for upside risks due to our calculations of the estimate that Eurostat used for Germany in the flash print.
  • Based on MNI calculations, the flash HICP German number all else equal would be consistent with around a 0.2ppt revision higher to the final Eurozone HICP print on 23 February (0.1-0.4ppt range).
  • For the monthly data, consensus is looking for a 0.2pp upwards revision to -0.2% m/m.
  • Core inflation is seen confirmed at +5.2% y/y. We will be eyeing any revisions made here. According to the flash release, underlying HICP fell -0.8% m/m, reflecting the -1.8% m/m fall in non-energy industrial goods prices and -0.2% m/m decline in services prices.
  • Markets currently price in 49bp for March (the ECB has explicitly signalled 50bp) with 84bp cumulatively by May, 105bp by June and a peak of 122bp by September October. The main risk from a higher print in our view would a steeper curve through the May-September period.

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