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Euro-area flash inflation: Lower headline, high core
Headline inflation drops below 3%, but core inflation remains stubbornly high. Even within core inflation, momentum is towards gradual slowing, though slowly as labour markets remain tight. Lower core and weaker labour markets are key to the ECB. Euro-area flash inflation dropped to 2.9% y/y in Oct (consensus: 3.1% y/y), down from 4.3% y/y in Sep. This was the last of the three months with large negative base effects. Going forward, the slowdown in inflation towards the ECB target at 2% will be slower. table At these levels – below 3% headline inflation – the ECB should gradually be changing reaction function ... (full story)