The Euro-area inflation numbers have seen a dramatic turnaround. From the double-digit rates seen in 2022, headline inflation has fallen to only 2.4% y/y in November. The core number, in turn, has retreated from a high of 5.7% to 3.6%. Both these numbers remain above the ECB’s target of 2%, but the momentum in price increases has weakened significantly, and if that downward momentum is maintained, the ECB could soon be worried about inflation undershooting its target. Especially the November inflation data was surprisingly soft, and most importantly, softness was seen in the core components of inflation, suggesting ... (full story)