Member State Inflation Affirms Further Pickup in Eurozone Inflation

Finalized November inflation figures for France, Spain, and Italy were in focus early in the session. Impact on the EUR was relatively muted, however, with the markets looking ahead to the FOMC policy decision and projections.

French Consumer Prices

In November, France’s annual rate of inflation picked up from 2.6% to 2.8%, which was in line with prelim figures. Month-on-month, consumer prices rose by 0.4%, which was also in line with prelim figures. In October, consumer prices had also risen by 0.4%.

According to Insee.Fr,

• Year-on-year, the pickup in inflation resulted from the acceleration in energy prices (+21.6% after +20.2%).
• There was also a pickup in inflation for manufactured goods prices (+0.8% after 0.3%) and service prices (+1.9% after 1.8%).
• The prices of food slowed down (+0.5% after +0.7%), however, with tobacco prices stabilizing (0.0% after +4.8%).
• Month-on-month, the key takeaway were softer prices of energy, which slowed from +4.8% to +1.5%).

Other Member States

Spain’s annual rate of inflation ticked up from 5.4% to 5.5% (prelim: 5.6%).

Market Impact

Ahead of today’s stats, the EUR had fallen to a pre-stat and current day low $1.12537 before rising to a pre-stat and current day high $1.12768.

In response today’s stats, the EUR fell to a post-stat low $1.12629 before rising to a post-stat high $1.12756.

At the time of writing, the EUR was up by 0.12% to $1.12724.

Next Up

Italy’s finalized inflation figures for November will be out shortly. According to prelim figures, Italy’s annual rate of inflation accelerated from 3.0% to 3.8%.

From the U.S, NY Empire State Manufacturing Index and import and export price index figures are due out, along with retail sales numbers for November. Expect November’s retail sales figures to be of greater significance as the markets look for the impact of inflation on consumption.

While the retail sales figures will influence, the FOMC monetary policy decision and economic projections will be key, however. There’s plenty of uncertainty over when the tapering will come to an end and, more critically, how many right hikes are likely next year.