Eurozone HICP Preview: Forecasts from six major banks, inflation may have not peaked yet

Eurostat will release the Eurozone Harmonised Index of Consumer Prices (HICP) data for November on Wednesday, November 30 at 10:00 GMT and as we get closer to the release time, here are the expectations forecast by the economists and researchers of six major banks regarding the upcoming EU inflation print.

The headline annualized HICP is expected to slow to 10.4% in November vs. 10.6% in October, with the core figure seen steady at 5.0%. On a monthly basis, the HICP in the old continent is expected to stay unchanged at 1.5% in the reported period while the core HICP is also seen flat at 0.6%.

Commerzbank 

“The development of energy prices is likely to have pushed down the inflation rate by around 0.4 percentage points in November. This contrasts with the continued sharp rise in food prices, which was largely responsible for the increase in the inflation rate in recent months. And the inflation rate excluding energy, food and beverages is also likely to have risen slightly further in November, from 5.0% to 5.1%. Overall, the inflation rate is therefore likely to fall only slightly from 10.6% to 10.4%. Moreover, the inflation rate could mark a new record high as early as December. Nevertheless, the slight decline in the inflation rate in November is likely to play into the doves' hands, who are in favor of a more moderate key rate hike of only 50 basis points in December.”

Danske Bank

“We look for euro inflation to rise to 10.8% YoY from 10.6% YoY but that core inflation holds steady at 5.0% YoY.”

Nomura

“We forecast headline HICP inflation to accelerate by 0.2pp to 10.8% YoY, whereas we expect core HICP inflation to accelerate by 0.1pp to 5.1% YoY. In our view, this will be pivotal for the ECB in deciding whether to hike by 75 bps at its December meeting versus hiking by 50 bps.”

TDS

“We now look for aggregate euroarea headline inflation to come down to 10.3% YoY. We think energy will be the big story this month, as the sharp drop in wholesale natural gas prices passes through to weaker energy inflation; however, uncertainty is high in this regard, which leaves both upside and downside risks to our forecast. Market focus should mainly be on the core number, which we think ticked down to 4.9% YoY, as ECB officials have deemed it a deciding factor in shaping their views for the December decision. While a big upside surprise could further skew risks towards a third consecutive 75 bps hike, anything else will likely further cement calls for a pivot to a 50 bps increase.”

SocGen

“We think HICP could decrease for the first time since mid-2021, falling from 10.6% to 10.2% in November. However, inflation has consistently surprised to the upside and there is a risk it could end up being higher than we expect. Due to negative base effects, we also see core inflation temporarily falling from 5% to 4.7%.” 

Citibank

“The November HICP reading is a key data release likely influencing the outcome of the December ECB meeting, between a 50 bps and a 75 bps hike. Headline inflation could post the first decline since mid-2020, driven by falling energy inflation. Uncertainty though remains on the energy HICP forecast, as retail gas prices may have dropped more than expected in some countries. Core dynamics however should stay strong. Euro Area: HICP Inflation, November: Citi Forecast 10.4% YoY, Prior 10.7% YoY (first decline since mid-2020); Core Inflation, November: Citi Forecast 5.0% YoY, Prior 5.0% YoY (still strong 0.4% MoM).”