Euro area flash HICP: Eurostat's first inflation estimate and euro futures

What the flash estimate measures

The HICP is compiled with harmonised methods across EU countries so that inflation is comparable, and the euro area figure is the measure behind the ECB's 2% inflation target. The flash estimate gives the annual rate for the headline and for the main components, energy, food, non-energy industrial goods and services, before the full detail is available.

Core measures are quoted in several ways; the most common excludes energy, food, alcohol and tobacco. Services inflation is watched most closely because it reflects wage and domestic demand pressures.

National prints come first

• Germany, France, Italy and Spain publish their own preliminary inflation figures, often on the same day or shortly before the euro area flash.
• Because these four economies weigh heavily in the euro area, their figures allow forecasters to update the euro area estimate before 11:00.
• The euro area flash can therefore produce a smaller surprise than the first national print of the cycle.
• Surprises in the national figures sometimes move 6E and European rate futures more than the aggregate itself.

Why futures react

Inflation relative to the ECB's target shapes the expected path of the deposit facility rate. A surprise moves euro area rate futures and the euro: 6E, priced in US dollars per euro, reflects the change in the expected gap between ECB and Federal Reserve policy. European index futures react through rates. The reaction depends on what the national figures already revealed and on how close the next ECB meeting is.

Order flow in 6E during the US night

At 11:00 in Luxembourg, it is 5:00 a.m. Eastern and 4:00 a.m. Chicago when clocks are aligned. US participants are mostly absent, and 6E trades with European participation on a thinner book than during US hours. The flash typically shows as a single footprint bar with a burst of volume, sometimes a sweep of a few levels, then quieter trading.

The national releases earlier in the morning or the day before can produce their own bursts. Reading the sequence, each national release, then the aggregate, is often more informative than the aggregate alone: if most of the move happened on the German figure, the euro area flash had little left to surprise.

In Senzoukria

Euro area inflation rows appear in the News calendar under EU, enabled by default, along with national releases that the calendar source files under the euro. The detail view shows each time in Chicago and UTC. For rows whose name includes CPI, the Quant mode card files them in the Inflation family and lists 6E and GC.

The week-ahead strip counts high and medium events per day, so the day that carries the national prints and the flash stands out.