Eurozone core inflation to move lower more sustainably in 2020 – ABN AMRO

"The flash estimate for eurozone inflation in December showed that headline HICP inflation increased to 1.3% yoy, up from 1.0% in November," noted ABN AMRO senior economist Aline Schuiling.

Key quotes

"The break-down in main components reveals that the jump was entirely due to energy price inflation, which increased to 0.2% in December, up from -3.2% the month before. We see some further upward pressure on headline inflation in the next month or two as recent oil price rises feed through, but it should fall back thereafter."

"Meanwhile, core inflation stabilised at 1.3% in December, with the inflation rate of non-energy industrial goods stable at 0.4% and services price inflation edging lower to 1.8% from 1.9%."

"Looking further ahead, we think that core inflation will move lower more sustainably in the course of this year. Underlying inflationary pressures should ease because growth in the eurozone economy has slowed down to levels somewhat below the trend rate since the start 2018 and we expect growth to remain subdued in the first half of 2020. Moreover, the weakness in the global economy should weigh on prices of non-energy industrial goods."