Here’s a slight splotch to the softer Spanish inflation report

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At first glance, the numbers here look like a big win for Team Transitory (it’s been a while) but digging deeper into the report, there is a bit of a blot in the details. Of note, core inflation actually came in at 6.3% for the month – which is higher than the 6.2% reading in October.

Be reminded that the core inflation reading strips out the volatile fresh foods and energy prices. So, what does that say?

It reaffirms what we saw from last week’s PMI data here. That being:

“We are starting to see inflation pressures cool off at a marked rate in Europe, owing to a decline in energy prices mostly. That said, overall inflation remains very much elevated and that is also still thanks to energy prices – which are still high by historical standards despite the recent drop.

Adding to that, the increase in cost pressures are spilling over to broader sectors and that could yet keep inflation – more specifically core inflation – elevated going into next year.

So, while there is some hopeful optimism, it is still too early to call this the turning point on the inflation battle just yet.”