There were Some Surprises in January's Euro Inflation Notes

EnclaveFX Ltd
Jan 25, 2023

As a result of a variety of different economic and technical factors looming with the turn of the year, the uncertainty surrounding the HICP release for January is greater than usual. The following are some of the most important issues you need to be aware of and how they may influence price developments.

Component weights for the HICP

Component weights for 2023 will be released in the flash figures. As with the Covid-19 pandemic in 2020, 2022 saw big changes to ‘traditional’ consumption patterns, and households on average spent a larger share of their income on energy consumption. We expect the new HICP energy weight to rise to ca. 13.8% (compared to 10.9% in 2022), magnifying the impact of energy developments on the HICP dynamics. As a result, core services and especially recreational services could see their weight decrease (see chart), with a readjustment in favor of recreational services occurring instead. As a result of the higher weightings for volatile items such as food and energy, HICP may also become more volatile and inflation risk premiums may increase.


Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell these assets. You should do your own thorough research before making any investment decisions. EnclaveFX Ltd does not in any way guarantee that this information is free of mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in the Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses, and costs associated with investing, including the total loss of principal, are your responsibility.

EnclaveFX Ltd and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. EnclaveFX Ltd and the author will not be liable for any errors, omissions, or any losses, injuries, or damages arising from this information and its display or use. The company is not responsible for errors or omissions.