According to a study by Nataxis, headline inflation in the euro zone is set to rebound as key inflation measures converge with core inflation (lower volatility in food and energy prices), rather than remaining low in the future.
General inflation will return to core inflation levels
Investors have seen a rapid drop in headline inflation in the EU, from 5.2% year-on-year in August 2023 to 2.9% year-on-year in October 2023. We must compare headline inflation with inflation excluding energy and unprocessed food ( Underlying inflation). It is common for energy and food prices to decline after having risen sharply, pushing general inflation below core inflation.
We have seen in the past that when this base effect in energy and food prices disappears, it is headline inflation that rises to the level of core inflation, rather than core inflation falling to the level of core inflation. general inflation.
Eurozone inflation will rise from its lowest point in autumn 2023 and converge towards the level of core inflation. The reference inflation of the euro zone is, therefore, the inflation that excludes the prices of energy and unprocessed food, which was 4.9% in October 2023.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
