Forecasts from six major banks, inflation rate to fall

Eurostat will release a first flash estimate of Eurozone Harmonised Index of Consumer Prices (HICP) data for January on Thursday, February 1 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.

Headline Eurozone inflation is expected at 2.8% year-on-year vs. 2.9% in December, while core inflation is expected to ease two ticks to 3.2% YoY.

Commerzbank

The inflation rate excluding the often highly volatile energy, food, alcohol and tobacco prices is likely to have fallen further from 3.4% to 3.2%. We expect headline inflation rate to fall from 2.9 % to 2.6 %. 

Deutsche Bank

We expect the headline Eurozone index to come in at 2.81% YoY (2.9% in December) and core at 3.27% (3.4%). We continue to see inflation easing further and settling around the target in the medium term, with headline averaging 2.1% YoY in 2024 and 2.3% YoY in 2025.

ABN Amro

Eurozone HICP inflation is expected to have stabilised at 2.9% in January. Core HICP inflation, in contrast, is expected to have declined in January, as the upward impact of past rises in energy prices is petering out. On top of that underlying inflationary pressures are easing due to the economic weakness that started in 22Q4 and has continued throughout 2023.

SocGen

The Euro Area January flash HICP is likely to print unchanged at 2.9% YoY, with core 0.3pp lower at 3.1% YoY. There is more uncertainty than usual in these forecasts, given the annual weighting changes.

Citi

Headline Euro Area CPI YoY (January flash) – Citi Forecast 2.5%; Prior 2.9%; Core YoY CPI, prior 3.4%. The January print is hard to predict (given seasonals, regulated price changes, the unwind of energy interventions, new weights), This sets up for a potentially oversized reaction this week.

TDS

We look for EZ HICP inflation to edge down to 2.8% in January, reversing a touch of December’s jump. Core inflation likely fell to 3.2% YoY. New HICP weights should add some upside pressure on the print, as the weight of the energy component should come down quite notably – thus removing some disinflationary pressure on headline inflation. The end of German energy subsidies, higher electricity network fees, and an increase in restaurant VAT also add upside risk. That said, we expect the slowdown in core momentum to continue.