Inflation in the Eurozone decelerated to 2.9% y/y in October according to initial estimates. The slowdown in price growth was steeper than markets had been expecting and was a sharp drop from the 4.3% rise a month earlier. The decline was material in energy and food prices. Energy price inflation, in particular, was deeply negative at -11.1% y/y as October 2022 represented a peak in the Eurozone’s energy price index. Even excluding energy and food, there was a slowdown in prices, with core CPI down to 4.2% y/y from 4.5% a month earlier and services inflation also ticking slightly lower at 4.6% from 4.7%.
The drop in inflation may be welcome news for the European Central Bank which held rates at its last meeting in late October. The price data was however paired with a negative GDP print for Q3 which showed the Eurozone economy contracting 0.1% q/q. The Eurozone has so far avoided a technical recession but growth in major European economies appears to be sputtering. Germany’s economy shrank in Q3, falling 0.1% q/q. And Q3 GDP data for France pointed to muted activity, rising just 0.1% q/q, markedly lower than the upwardly revised 0.6% q/q rate of growth seen in Q2.
Preliminary data suggests that Saudi Arabia’s GDP fell 4.5% y/y in Q3, after gaining 1.2% y/y in Q2. The decline was driven by oil sector GDP, which fell 17.3% y/y after the Kingdom cut oil production earlier in the year. Non-oil GDP in contrast rose 3.6% y/y, lower than the 5.3% y/y growth recorded in Q2.
Despite the strong economic activity data seen recently, the US Conference Board consumer confidence measure declined in October. The measure fell to 102.6 from an upwardly revised 104.3 in September. The fall in the headline was driven by a 3.1 point decline in the present conditions index. There was also a decline in the future conditions index, but this fell to a smaller degree.
The Caixin China general manufacturing PMI for October fell below the neutral-50 mark, signaling a contraction in activity. The headline index fell to 49.5 from 50.6 in September. Consensus expectations had been for a rise to 50.8.
Retail fuel prices in the UAE will be lower in November, with average oil prices having moderated slightly in October despite heightened geo-political tensions. Mid-grade petrol prices will decline to AED 2.92/litre, down 12.3% m/m, from AED 3.33/litre in October. Diesel prices will be marginally lower, falling from AED 3.57/lire to AED 3.42/litre.
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