Global | Inflation and Bottlenecks October 2023

Summary

Inflation surprised to the downside across major economies in October. Besides a favorable base effect and lower energy, reassuringly, services inflation is beginning to ease as well, in both, the US and the eurozone. Meanwhile, bottlenecks seem to be over.

Key points

• Key points:
• In the US, October headline inflation resumed its downward trend (to 3.2% y/y, from 3.7% y/y). Main drivers included a favorable base-effect, a meaningful moderation in housing-related prices and a sharp fall in energy prices.
• Eurozone inflation also eased markedly in October (to 2.9% y/y, from 4.3%y/y), as energy prices continued to decline due to base effects, and by a decline in core goods inflation and, to a lesser extent, in services.
• Monthly core inflation rates moderated in the US and the eurozone to levels (0.2%m/m) that are consistent with the return of inflation to Central Banks medium term target.
• The persistence of inflation inched down in the eurozone, as the number of items with recurring increases continued to decrease, while it stabilized in the US.
• Consumer inflation expectations inched up in the US, while market and analysts’ inflation expectation remained steady, below 3%. In the eurozone, one-year-ahead consumer expectations rose to 4%, and analysts’ expectations were steady and close to the ECB’s 2% medium term target.

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