2/12/2024 0 Comments Citi Global Macro Surprise Index![]() ![]() But there is no evidence in the recent data that the eurozone wage pressure is building up. Wage agreements have indeed been higher in several countries (especially Germany). There is also an emerging debate about wage-price spirals in the eurozone. The removal of VAT base effects in Germany (which is a key contributor to the overall eurozone inflation) ensures a fall from Q1 onwards. But it should not play a major role any longer. What are the drivers behind this acceleration ? Are they here to stay ? Base effects are a significant contributor. The increase in prices is becoming so painful that companies have no other choices but to pass along costs to consumers to preserve margins. This will fuel a higher consumer price index in the coming months. Expect a new surge to 22.9% year-over-year versus prior 21.9% in October. The eurozone price producing index for November will be released later this morning (at 1000 GMT). The market has clearly underestimated the inflation risk in the region – and there may be more upward movement to come in the short term. Inflation surprises have run comparatively hotter in the eurozone than in the United States where they have peaked. Our chart shows that for the eurozone, the level of surprise has hit its highest level on record. More than 100 charts to follow the latest market and macro developments. Click here to download this week's full edition of Macro Chartmania. ![]()
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