The Eurozone Harmonised Index of Consumer Prices (HICP) data for January is due to be released by Eurostat on Thursday, February 23 at 10:00 GMT. As the release date draws closer, economists and researchers from four major banks have shared their expectations for the upcoming EU inflation print.
The consensus is that the headline HICP will be 8.7% year-on-year, up from 8.5% in December, while core HICP will remain unchanged at 5.2%. On a monthly basis, the HICP in the old continent is expected to fall by -0.4%, and the core HICP is seen down by -0.8%.
Commerzbank analysts believe that the Eurostat statisticians likely assumed a previous month’s rate of change in the harmonised consumer price index of -0.1% for Germany, but the Federal Statistical Office’s preliminary estimate showed an index rise of 0.5%. This means that the consumer price index for the euro area did not fall by 0.4% in January, but only by 0.2%, suggesting a revision upwards from 8.5% to 8.6% or possibly even 8.7%.
According to TDS, while EZ inflation data is rarely revised by much, they look for headline inflation to be revised up by 0.2ppts in January, which would mark the biggest revision since 2015. Their forecast (Headline 8.7%, Core 5.2% YoY) is primarily driven by the discrepancy between the actual and Eurostat’s estimate of the delayed German inflation data, as Eurostat’s estimate did not account for the major energy subsidy changes.
SocGen analysts note that with the delayed German inflation release printing at 9.2%, which is above the 8.5/8.6% estimate that they believe Eurostat used, the final euro area HICP figure may be revised up from 8.5% to 8.6%. However, there is more uncertainty over whether the core and other major components will be revised, especially with Germany only releasing data on the headline figure.
Finally, Nomura analysts believe that the German headline inflation data subsequently printed at 9.2% YoY should push euro area headline HICP inflation for January up to 8.7% YoY, and push euro area core HICP inflation for January to 5.3% YoY (from 5.2% YoY in the flash estimate).
Inflation is an important economic indicator and the upcoming Eurozone Harmonised Index of Consumer Prices (HICP) data for January will be closely watched by economists and investors around the world. It is expected that the headline HICP will be 8.7% year-on-year, up from 8.5% in December, while core HICP will remain unchanged at 5.2%. On a monthly basis, the HICP in the old continent is expected to fall by -0.4%, and the core HICP is seen down by -0.8%.
The discrepancy between the actual and Eurostat’s estimate of the delayed German inflation data is expected to have an impact on the final euro area HICP figure, with the headline HICP inflation for January likely to be revised up to 8.7% YoY, and the euro area core HICP inflation for January to 5.3% YoY.
Inflation data can have a significant impact on the markets, affecting the value of currencies, commodities and stocks. Investors across the world will be closely monitoring the release of the HICP data to get an indication of the economic health of the Eurozone. It remains to be seen how the markets will react to the data, and whether the expectations of the economists and researchers from the four major banks will be met.
