Eurozone HICP Preview: Forecasts from four major banks, upside revision

Eurostat will release the Eurozone Harmonised Index of Consumer Prices (HICP) data for January on Thursday, February 23 at 10:00 GMT and as we get closer to the release time, here are the expectations forecast by the economists and researchers of four major banks regarding the upcoming EU inflation print.

Headline is expected at 8.7% year-on-year vs. 8.5% in December while core is set to remain unchanged at 5.2%. On a monthly basis, the HICP in the old continent is expected to fall by -0.4% in the reported period while the core HICP is also seen down by -0.8%.

Commerzbank

“In the preliminary estimate of the euro area inflation rate for January, Eurostat statisticians apparently assumed a previous month's rate of change in the harmonised consumer price index of -0.1% for Germany. According to a preliminary estimate by the Federal Statistical Office, however, the index rose by 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%. The YoY rate of change is thus likely to be revised upwards from 8.5% to 8.6% or possibly even to 8.7%.”

TDS

“While EZ inflation data is rarely revised by much, we look for headline inflation to be revised up by 0.2ppts in Jan – which would mark the biggest revision since 2015. Our 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

“With the delayed German inflation release printing at 9.2%, which is above the 8.5/8.6% estimate that we believe Eurostat used, the final euro area HICP figure may be revised up from 8.5% to 8.6%. For core and the other major components, there is more uncertainty over whether they will be revised, especially with Germany only releasing data on the headline figure.”

Nomura

“The flash estimate of January euro area HICP inflation printed at 8.5% YoY. This, however, assumed 8.6% YoY inflation for Germany; at the time of publication, German data were unavailable, so it required Eurostat to make an assumption. German headline inflation, meanwhile, subsequently printed at 9.2% YoY. According to our calculations, this 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).”