Euro zone inflation likely stable in December

While looking at the current economic situation in Euro Area, one can analyse the improved energy component rising from -7.3% yoy in November to -5.9% yoy, adding 15bp to the headline figure. However, food prices have also dipped from 1.5% yoy to 1.2% yoy, cutting 6bp from the headline figure.

Societe Generale expects Euro Area HICP inflation to average 0.6% in 2016 and 1.6% in 2017, while the core metric should average 1.1% in 2016 and 1.3% in 2017. The core component remained stable at 0.9% yoy, with non-energy industrial goods prices remaining constant at 0.5% yoy and prices paid for services dipping marginally from 1.2% yoy in November to 1.1% yoy in December, cutting 4bp from the headline figure.