We monitor monthly EU inflation dynamics across Headline (HICP) and Core metrics. While Headline captures the full consumer basket, Core provides a clearer view of long-term trends by excluding volatile components, including energy and food. We also track daily commodity prices to spot whether raw material costs are cooling down or heating up the future cost of living.
CURRENT READINGS
Headline inflation in Europe currently runs at 3% YoY - above target and moving higher - and up by 0.40% since last month. Core inflation is running at 2.2% and falling..
Energy prices run at 10.9% YoY, up by 5.80% in the month - high, in the top range of 10-year observations (elevated in historical terms). In parallel, the price of a global basket of commodities is moving up by 41.8% YoY.
MARKET IMPLICATIONS
Realized inflation has been mixed, favoring shorter duration bonds and stocks, while more problematic for longer-duration bonds.
In general terms, inflation is a key variable for investors. Remember that we observe here realized inflation. For market expectations, go to the breakeven page. Higher expected inflation is bad for bonds and good for commodities and traditional stocks (up to a limit, until it starts destroying consumption). Lower expected inflation is good for bonds and growth stocks.