Update inflation model – energy prices on the rise
Our machine learning based quant model is forecasting higher inflation in the euro area in the coming months than a month ago.
Commerzbank Economic Research
01/21/2025
Inflation should fall in the first half of the year
Our updated Quant-model for inflation in the euro area based on machine learning (see here ) continues to expect the ECB target to be reached in the summer. A slight upward revision of the Quant-model compared to the update in December does little to change this. Above all, higher commodity prices at the turn of the year will lead to an inflation rate that is up to 0.1 percentage points higher than previously expected.
For our main forecast, we have added further assumptions to the purely data-driven Quant-model. This is because insurance premiums, for example, rise significantly at the beginning of the year, which the Quant-model does not fully include in its calculations. Including additional assumptions, we expect an inflation of 2.5% for January 2025. Over the course of the year, inflation is likely to come close to the ECB's target of 2%, but not fall below it according to our forecast.
For full text see attached PDF-Version.
