Eurozone inflation: Still weak momentum – Nordea Markets

According to analysts at Nordea Markets, the final Euro-area HICP release confirms the flash estimates of 1.1% y/y core and 2.2% y/y headline inflation in October.

Key Quotes

“Supercore inflation – which only includes those core prices that are sensitive to the business cycle and make up the approximate half of the core prices – increased to 1.5% y/y in October from 1.2% y/y in September.”

“The increase is due to base effects from the lowering of Italian education prices a year ago as well as package holiday prices. In momentum terms, supercore picked up on the month in October, but has weakened over the last three months. Momentum is still weak, but the trend is up.”

“The weak core inflation numbers and recent decline in the oil price, however, mean that the revisions to the ECB's inflation projections in December are going to be negative.”

“We stick with 1.1% y/y as the preliminary forecast for core inflation in November.”