EUR Inflation Watch: Food for pause’istas
![WS Inflation](https://stenoresearch.com/wp-content/uploads/2023/01/WS-Inflation.png)
The market consensus for the European June inflation numbers is very soft, both seasonally adjusted and relative to the developments seen in June over the past 5 years.
It seems like the bet on a soft transportation category (car insurance and the likes) is the major reason behind the weak EUR-flation consensus numbers, but there is a statistically solid case to bet on the upside here, even a potentially large surprise to the upside. We see risks clearly tilted in that direction.
Our nowcast of a 0.28 MoM in June in Transport is incredibly soft relative to typical patterns, but we are still not able to get as low as the consensus inflation numbers.
Chart 1: Nowcasts for the Euro-zone HICP
There is a solid risk/reward in betting on a hawkish surprise to the European HICP numbers in June as the market consensus is soft. Beneath the hood, some of the forward-looking indicators show signs of continued disinflation.
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