Euro area final inflation downwardly revised in November, likely to further ease in December

Euro area inflation has started to ease last month, having peaked in October at 2.2 percent year-on-year, the highest level since 2012. The final estimate of November’s inflation released today saw a downwards revision of 0.1 percentage point from the flash estimate to 1.9 percent year-on-year.

However, delving into data, the latest changes were widely cosmetic: to three decimal places, the headline rate was downwardly revised to 1.945 percent year-on-year from 1.965 percent year-on-year, with the change accounted for mainly by very minor amendments to the non-core components, stated Daiwa Capital Markets Research in a report.

For energy, the revision was in the rounding range, so its inflation rate was the same at 9.1 percent year-on-year, down from 10.7 percent year-on-year in October. In the meantime, food inflation was downwardly revised by 0.1 percentage point to 1.9 percent year-on-year, the lowest level since February.

Meanwhile, the core rate was left unchanged from the flash estimate. The core inflation stayed at 1 percent year-on-year, still 0.1 percentage point lower than in October and consistent with average of the last two years.

Looking ahead, the headline inflation rate is expected to further fall slightly in December, as declining energy prices put additional downward pressure, and that downtrend is expected to be maintained well into next year.

“And as we also expect core inflation to edge higher only gradually, we foresee headline inflation averaging only 1.3 percent Y/Y in 2019, with minimal further increases in 2020 and 2021”, said Daiwa Capita Markets Research.

At 17:00 GMT the FxWirePro's Hourly Strength Index of Euro was neutral at 5.1978, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at -26.9765. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex