In November, inflation in the Euro area rose to 2.3% on an annual basis, compared to 2% in October, while the “core” figure, which excludes food and energy, remained unchanged at 2.7%, slightly higher than analysts’ expectations. The costs of services, although decreasing slightly, remain high, while non-energy industrial goods recorded a further increase.
How consumer prices vary
National data show a diversified panorama: in Germany, inflation remained stable at 2.4%, while in Spain it increased, reaching the same level. France and Italy, however, recorded smaller increases, at 1.7% and 1.6% respectively.
What will the ECB do at its mid-month meeting?
Base effects of energy prices, second Massimo De Palma, Head of Multi Asset Team at GAM (Italy) SGR, could lead to a temporary increase in the coming months, followed by a probable reduction in the medium term.
In view of the ECB meeting next Thursday 12 December, the The board of directors appears divided: on the one hand, some members push for quick cuts to interest rates to counteract the economic slowdown; on the other, the persistence of inflation in services and wage increases fuel a more cautious approach. The December economic projections will play a crucial role in defining the future strategy, explains the expert, in a context aggravated by geopolitical and commercial uncertaintiesincluding US tariff policy.
And the Federal Reserve?
The orders for durable goods in October in the United States they recorded a modest increase of 0.2%, mainly driven by the transport sector. However, excluding these, they only increased by 0.1%. The improvement in business sentiment and the end of electoral uncertainties could favor an acceleration of investments in the coming months.
The personal income grew 0.6% in October, higher than the expected 0.3%, with a substantial increase in disposable income, while the personal savings rate rose to 4.4%. Despite lower real spending on durable goods and discretionary services, the increase in income continues to support a solid spending capacity of families, outlining a positive picture for consumption, confirmed by the record online sales recorded during the Black Friday.
The PCE core annual rate stood at 2.8% in October, with a monthly increase of 0.27%, while the figures for August and September were revised slightly upwards. The financial services component contributed significantly to the increase, reflecting the positive momentum of the markets. The slowdown in disinflation and the improvement in incomes, underlines De Palma, confirm that the Fed could slow down the pace of cuts, maintaining a prudent attitude to balance growth and inflation.
THE monetary funds Americans continued to grow, reaching the record figure of 6,600 billion dollars in November 2024. This evolution “reflects global economic uncertainty, high interest rates and persistent geopolitical tensions”, which have pushed investors to park liquidity in short-term instruments. However, in the event of significant corrections in the stock markets, part of this capital could be redirected towards riskier assets but with potentially higher returns, thus helping to limit any significant drawdowns. Furthermore, a possible progressive cut in interest rates could accelerate these flows towards “more profitable investments”.
