Analysts at TD Securities note that Eurozone’s September flash headline inflation came in as expected at 2.1% y/y, but the core measure disappointed at 0.9% y/y (mkt: 1.1%), which will pose challenges to the ECB if it doesn’t break out above 1% in the next few months.
Key Quotes
“The softness in core was likely driven by core services prices, though details at this stage remain scant. President Draghi described their core inflation forecast as “vigorous” earlier this week (they forecast core inflation to hit 1.8% in 2020), but today’s data just continues the sideways move seen in recent years: core inflation has remained between 0.6% and 1.2% since 2013. The German unemployment rate unexpectedly fell to a record low in September, hitting 5.1%.”
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