Breaking: Eurozone Preliminary HICP inflation declines to 2.9% YoY in October vs. 3.1% expected

The Eurozone Harmonised Index of Consumer Prices (HICP) rose at an annual pace of 2.9% in October, as against a 4.3% increase in September, the official data published by Eurostat showed on Tuesday. The HICP inflation print was anticipated at 3.1% in the reported period.

The Core HICP inflation dropped 4.2% YoY in October, compared with September’s 4.5% uptick. The market consensus was for a 4.2% acceleration.

On a monthly basis, the bloc’s HICP rose 0.1% in October vs. a 0.3% rise registered in September. The core HICP inflation came in at 0.2% in the reported month, rising at the same pace as seen in September.

The European Central Bank’s (ECB) inflation target is 2.0%.

The old continent’s HICP inflation data have a significant impact on the market’s pricing of the ECB policy outlook. Markets are currently wagering that the ECB is almost at the end of its tightening cycle.

Key details from the Eurozone inflation report (via Eurostat)

“Looking at the main components of euro area inflation, food, alcohol & tobacco is expected to have the highest annual rate in October (7.5%, compared with 8.8% in September), followed by services (4.6%, compared with 4.7% in September), non-energy industrial goods (3.5%, compared with 4.1% in September) and energy (-11.1%, compared with -4.6% in September).”

EUR/USD reaction to the Eurozone inflation report

The Euro is feeling the pull of gravity on softer Eurozone inflation data. EUR/USD is reversing from intraday highs of 1.0675 to trade at 1.0655, as of writing. The pair is still up 0.40% on the day.