Something for your Espresso: Inflation or not?
Morning from Europe
French finance minister Le Marie confirmed that electricity costs will rise by 8.6-9.8% nationwide by first of February in a televised appearance yesterday
This is LESS than penciled in by the ECB in the Q1-HICP forecast (15% was the increase in Feb-2023) and a little less than our projection of 10%.
Another (albeit mildly) soft surprise in relation to the VAT-increases in Q1. This takes our now-cast of French HICP in February to 0.41% MoM against an increase of 1.13% in Feb-2023.
There will be plenty of benign “base effects” in European HICP data in Q1, except from in Italy.
Chart 1: HICP projections for France
Inflation evidence based on price trends in January remains soft in Europe, but the danger from freight rates looms large. Will the ECB choose the half glass full or empty approach on Thursday?