EUROPEAN INFLATION: Headline PCCI Continued Its Gradual Ascent In December
Jan-17 16:19
The ECB’s preferred underlying inflation metric – headline PCCI – rose 11bps in December to 2.10%. Although only a tenth above 2%, this extends a gradual acceleration from cycle lows of 1.72% last May. However, core (i.e. ex-energy and food) PCCI was unchanged at 1.84%, and has been below 2% for 9 consecutive months now.
- Other underlying inflation measures (supercore, trimmed mean, weighed median) were little changed relative to November.
- Services inflation confirmed flash estimates at 4.0% Y/Y in December, up a tenth on a rounded basis from November. On an unrounded basis, services was 3.97% (vs 3.92% prior).
- Package holidays accelerated to 7.8% Y/Y (vs 6.6% prior), while airfare inflation was 7.6% Y/Y (vs 10.3% prior).
- Excluding these two volatile categories, we calculate services inflation at 3.76% Y/Y (vs 3.72% prior). However, this was still below the 3.84% Y/Y average for 2024 as a whole.
- Within this metric, recreation and culture services accelerated to 4.1% Y/Y (vs 3.8% prior) while accommodation services rose to 5.5% (vs 4.9% prior). These were offset by decelerations in communications (-3.6% Y/Y vs -3.1% prior) and audio-visual, photographic and information processing equipment (-3.4% Y/Y vs 3.0% prior).
- The ECB’s seasonally adjusted data (revised for the final estimate) confirmed sequential services inflation at 0.3% M/M, while 3m/3m SAAR momentum declined to 2.6% Y/Y (vs 2.8% prior). The ECB will be watching future momentum outturns closely, particularly with some analysts and policymakers (e.g. Schnabel) recently questioning the reliability of the ECB’s seasonal adjustment methodology.
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Statement: Leaving Inflation Description Alone (1/2)
Dec-18 16:17
MNI expects only limited changes to the November statement at the December meeting. Going through the opening paragraphs of the November statement in italics:
- The first paragraph on economic conditions requires little more than tweaking, if even that. Economic activity remains “solid”, and the description of the labor market/unemployment still stands.
- Some analysts who expect a more hawkish message suggest that the inflation language could be adjusted to reflect the apparent stalling of disinflation by some metrics since the summer.
- As for the second paragraph, there’s no need to signal any changes to the balance of risks on the basis of recent data.
FED: US TSY 17W AUCTION: NON-COMP BIDS $586 MLN FROM $64.000 BLN TOTAL
Dec-18 16:15
- US TSY 17W AUCTION: NON-COMP BIDS $586 MLN FROM $64.000 BLN TOTAL
US DATA: No Sign of Tariff Pressures In Business Inflation Expectations
Dec-18 16:12
The Atlanta Fed’s Business Inflation Expectations survey showed no sign of businesses expecting new tariff-induced inflationary pressures.
- The average expected change in unit costs over the next twelve months eased to 2.04% from 2.16%.
- It’s the lowest since Dec 2020 and has nearly drawn level with the 1.94% averaged in 2019.
- That’s in contrast to the latest pop higher in consumer surveys, with the U.Mich survey lifting three tenths to 2.9% in December away from its 2019 average of 2.6%.
- Back to the BIE, this month’s special question for Q4 saw long-term business inflation expectations (over the next 5-10 years) ease another tenth to 2.6% for its lowest since 3Q20 and below a long-term average of 2.8%.
- Again, this is in contrast to the U.Mich 5-10Y consumer inflation expectations measure currently at the high end of its typical range and having pushed above this range briefly in November.
