Morning from Europe.

The final inflation numbers from Germany are out without major surprises.

We will get the 2023 revisions from the US Bureau of Labour statistics later today. We know that Services increased in volume from a spending perspective relative to goods and food in 2022, which is the new “reference year” in the calculations.

This will generally add to the significance of services in the CPI basket for 2024, which can be construed as both good and bad news. We mostly see it as good news for the Fed.

Chart 1: 2022 consumption expenditures (in volumes)