It’s time for the monthly preliminary inflation numbers from Europe again and we are yet to fear a YoY re-acceleration in European numbers. Base effects are massive over the course of September and October, but there are signs of a cyclical pick-up in EUR-flation from late Q4 and onwards as well.

Let’s have a look at the details.

Another couple of months of easy disinflation
European inflation is still broad-based outside of electricity and heating. Transportation services, recreation, culture and Restaurants & Hotels have remained hot over the summer (also in YoY terms) and the big test for the inflation momentum is now whether the discretionary spending and services inflation will wane at the same time over the course of the autumn. We certainly lean that way given the weakness seen in Europe.

Chart 1: European inflation heat-map (in YoY terms)