JPMorgan Econ FI-Euro area Soft core pressures late last year-106001050

JPMORGANEuropeEconomicResearch17January2024Euroarea:Softcorepressureslatelastyear•HeadlineinflationupduetoenergyEconomicandPolicyResearch•Corecontinuedtodecline;themonthlypressureissoft•HighertaxestoliftconsumergasandelectricitypricesatthestartoftheyearRaphaelBrun-Aguerre•Weexpectcoretobecloserto2.5%oyabythesummer(44-20)7134-8308Eurostat’sfinalEuroareaDecemberHICPprintcameinlinewiththeflashraphael.x.brun-aguerre@jpmorgan.comestimate.Lookingatthebroadpicture,headlineinflationincreased0.5%-pttoJ.P.MorganSecuritiesplc2.9%oyaandcoreinflationdecline0.2%-ptto3.4%oya.Theheadlineinflationincreasewasentirelydrivenbyenergypriceinflation,up4.8%ptsto-6.7%oya.Thestrongriseingasandelectricitypricesthroughlate2022liftedinflationandleadtoapowerfuldragin2023whichstartedtofadeinDecember.Foodpriceinflationmeanwhilewasdown0.8%-ptto6.1%oya,andthusremainedonadownwardtrend.Thedeclineincoreinflationfinallywasskewedtowardcoregoods(down0.4%-ptto2.5%oya)whileservicespriceinflationwasflatat4.0%oya.Detailswerereleasedforthefirsttimetoday.Regardingtheriseinenergypriceinflation,thesedetailsshowthatgaspriceinflation(+9.2%-ptsto-15.5%oya)wasthemaindriver(inparticulartheGermangovernmentpaidthewholegasbillforconsumersinDecember2022,leadingtoadropingasprices).Electricitypriceinflationmeanwhileincreasedbyalesseramount(+1.1%-ptsto-13.1%oya)a...