The price growth index does not fall evenly in all countries. Moreover, in some places, like currently in Germany, there are rebounds upwards. Meanwhile, markets are slowly stabilizing after the turmoil that was the election of our western neighbors.
Inflation increase in Germany
Yesterday’s data showed that, in line with analysts’ expectations, prices in Germany are rising by 2% annually. The monthly rise, however, seems more significant – as much as 0.4%. Given that last November was a month of inflation decline, we can expect the annual indicator to accelerate again next month. The current change is not yet alarming, but in this pace, we might be getting closer to dangerous levels. One should also remember that political instability increases the chances of changes before snap elections. These, along with already rising inflation, can in turn delay interest rate cuts throughout the Eurozone.
Inflation in the region
Yesterday, we also learned about the inflation rate in Romania and Hungary. In Romania, prices are rising by 4.7%, which is a bit of a surprise, as analysts’ had predicted a 4.4%. This is probably why the country has put on hold the cycle of interest rate cuts. In Hungary, on the other hand, a rebound in the price growth rate from 3% to 3.5% was expected. However, the final reading was 3.2%, which is a pleasant surprise for the pockets of Hungarians. Lower inflation leads to quicker interest rate cuts, and therefore a weaker forint. Considering the current condition of the forint, it is scary to think that it could become even weaker. While the Polish zloty is still about 15% away from its weakest levels against the euro observed at the start of the Russian invasion, in the case of the Hungarian forint it’s only 5%.
Landscape after the elections
Given that we are already nearly a week after the US elections, we can make some summaries. The markets reacted enthusiastically and did not revert to pre-election levels. The US stock exchanges are at historic highs. Cryptocurrencies, as we mentioned yesterday, despite a slight correction, are still well above pre-election levels. Additionally, there is the strengthening dollar, which strengthened by as much as 3 cents against the euro in just a little over a week. For some reason, even though the new president was fond of surrounding himself with gold, the metal – from its early November highs of $2800 per ounce – has dived to $2600 per ounce.
In today’s macroeconomic calendar, it is worth to pay attention to:
14:30 – USA – consumer inflation.
Maciej Przygórzewski – chief analyst at InternetowyKantor.pl
Source: https://managerplus.pl/inflacja-nie-calkiem-pod-kontrola-28517
