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Intesa Sanpaolo: Euro area – Inflation forecasts revised up

Intesa Sanpaolo:  Inflation in the euro area accelerated rapidly over the past few months, to 3.4% y/y in September.

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Weekly Economic Monitor – 8 October 2021

Intesa Sanpaolo – Research Department


While we stick to our view that the rise of inflation will prove transitory, we now fear that it will not be short-lived. Based on our forecasts, the headline index should average 2.3% in 2021, while probably staying just above 2% in 2022 as well. The trend will be decreasing during the next year, with a likely high in February (at 3%) and a low in December (1.2%).

The week’s market movers

In the euro area , August data should outline a contraction of industrial output in Italy and in the Eurozone as a whole, affected by supply-side bottlenecks. In Germany, the October ZEW survey should report confidence worsening in terms of both expectations and current conditions. Lastly, the final estimates of consumer prices should confirm the rise of inflation in Germany, France, and Italy in September.

This week a number of important data releases are scheduled in the United States . The focus will be on the September CPI and on retail sales. The CPI should be up by 0.3% m/m, with upward pressures for core goods and a possible, incipient reacceleration for rents and healthcare. Retail sales are expected lower as a result of the correction of auto segment but should rise significantly net of car sales. The first set of manufacturing and consumer confidence surveys for October should confirm concerns among businesses stemming from supply shortages and price pressures, and among households over rising inflation. For what concerns the events agenda, the spotlight will be on the minutes of the September FOMC, that should provide indications on the expected timeline of the monetary policy reversal, and on the House vote to raise the debt ceiling.


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