Here’s a slight blemish to the softer Spanish inflation report


At first glance, the numbers here look like a big win for Team Transitory (it’s been a while), but digging deeper into the report, there’s a bit of a smudge in the details. It should be noted that core inflation actually came in at 6.3% for the month, which is higher than the 6.2% posted in October.

Remember that the reading of underlying inflation excludes the volatility of fresh food and energy prices. What does it say?

This reaffirms what we saw from last week’s PMI data here. This being:

“We are starting to see inflationary pressures cooling at a marked pace in Europe, mainly due to lower energy prices. That said, headline inflation remains very high and this is still thanks to energy prices – which are still high by historical standards despite the recent decline.

Adding to this, increased cost pressures ripple through wider sectors and that could still keep inflation – more specifically core inflation – high until next year.

So while there is some upbeat optimism, it’s still too early to call this the turning point in the battle against inflation.”


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