Core inflation remains high for EU, as headline sees disinflation

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Quick Take

• The inflation rate year over year for the Eurozone area saw 6.1%, which was in line with consensus.
• However, it remains three times the target of the ECB of 2%.
• Core inflation remained stubborn, high, and around 5.3%, falling just 0.3% from the previous month.
• This is a problem in the Western world, as the headline continues to see disinflation, but core inflation which excludes energy and food, is becoming increasingly stubborn.
• This follows the 25bps rate hike yesterday from the ECB that saw their interest rate increase to 4.00%.
• Disinflation is different from deflation; deflation is a decrease in the general price level of goods and services.
• Disinflation means that prices are still increasing but increasing at a slower rate than before.