• Today, German HICP for September was revised down by 0.1pp to -0.5% yoy. We don’t expect this to trigger a downward revision to the eurozone flash estimate (reported at -0.3% yoy), unless there is a large downside surprise on the French number out on Tuesday.

  • The final September HICP release for the eurozone is due on October 15. We think energy was the main driver of the decline in the yearly inflation rate vs. August, with food inflation also expected to inch down further. Core inflation probably was stable at 1.3%, with some downside risks.

  • In the eurozone, preliminary information for October confirms that the yearly inflation rate will probably edge up vs. September. At this stage, our best guess remains for a -0.1/-0.2% yoy reading. All our projections remain virtually unchanged from last week.

  • It’s interesting to note that in the eurozone the 5y/5y inflation forward has climbed to very high levels, corresponding to the top of the trading range since the inception of the series. Our 2009-2010 inflation forecasts, however, have remained stuck at the current level for the last six months. In our view, also the price outlook beyond 2010 has hardly changed, if not for a somewhat smaller risk of excessively low inflation. The current increase in the 5y/5y forward is hard to justify if one looks at fundamentals.