MARKET MOVER - BNP PARIBAS - Investment Services India

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Global Inflation Watch First Flash Estimates for Sept. Out Next Week Chart 1: Oil and Energy Price Forecasts The key releases of the week will come from the eurozone, where several national statistics offices will release flash estimates of September HICP and CPI inflation. The eurozone flash HICP is out next Friday. We saw a jump in headline rates across the eurozone in August, as the lagged effects of oil price rises fed through to fuel price indices and boosted headline inflation rates. Although further upward price pressure from energy is unlikely this month, price falls are also unlikely, so annual energy inflation should be flat on the month for much of the region. Our forecast for oil prices assumes little movement in either direction over the remainder of the year. This should mean that energy inflation in the eurozone continues to moderate. In the first quarter of 2013, we should see the pace of moderation pick up on base effects. Our current forecast suggests that by April 2013, energy price inflation in the eurozone will have fallen to 3% y/y (Chart 1). In terms of core price inflation in September, Italy and Spain will be mirror images of each other (Chart 2), as Italy’s 1pp VAT increase of last year washes out of the annual inflation rates and Spain’s new, higher VAT rates become effective. Spain’s VAT increase of 3pp on the standard rate (from 18% to 21%) is much larger than Italy’s increase last year (from 20% to 21%), so the boost to the Spanish indices this month should dwarf the falls in Italian inflation. However, at the eurozone level, Spain is a smaller fraction of the eurozone aggregate than Italy, so these tax effects should broadly offset each other at the eurozone level. The squeeze on the Spanish consumer is set to continue: the Spanish government announced this week that electricity tariffs would rise 10% from January 2013. We think this will add 0.5pp to energy price inflation in Spain in January, equivalent to 0.06pp on headline HICP inflation. The impact on eurozone headline inflation will be minimal. The preliminary estimate of Belgian inflation in September will also be released next week. In a sign that weak domestic demand is depressing prices, car manufacturers have recently been offering heavy discounts. We think core inflation as a whole will moderate this month, contributing to a moderation in the headline rate from 2.9% y/y to 2.6%. Source: Reuters EcoWin Pro, BNP Paribas Chart 2: Core Inflation in Italy and Spain Source: Reuters EcoWin Pro, BNP Paribas Source: Reuters EcoWin Pro Chart 3: Inflation in Belgium Catherine Colebrook 20 September 2012 Market Mover 32 www.GlobalMarkets.bnpparibas.com
Table 1: BNP Paribas' Inflation Forecasts Eurozone France US Headline HICP Ex-tobacco HICP Headline CPI Ex-tobacco CPI CPI Urban SA CPI Urban NSA Index % m/m % y/y Index % m/m % y/y Index % m/m % y/y index % m/m % y/y Index % m/m % y/y Index % m/m % y/y 2010 109.8 - 1.6 109.5 - 1.5 121.1 - 1.5 119.8 - 1.5 218.1 - 1.6 218.1 - 1.6 2011 112.8 - 2.7 112.4 - 2.7 123.7 - 2.1 122.2 - 2.1 224.9 - 3.1 224.9 - 3.2 2012 (1) 115.7 - 2.5 115.2 - 2.5 126.3 - 2.1 124.7 - 2.0 229.7 - 2.1 229.7 - 2.1 Q1 2011 111.3 - 2.5 110.9 - 2.4 122.5 - 1.8 121.0 - 1.7 222.1 - 2.1 221.7 - 2.1 Q2 2011 113.1 - 2.8 112.7 - 2.7 123.9 - 2.1 122.4 - 2.0 224.5 - 3.3 225.5 - 3.4 Q1 2012 114.3 - 2.7 113.8 - 2.6 125.3 - 2.3 123.8 - 2.2 228.3 - 2.8 227.9 - 2.8 Q2 2012 115.9 - 2.5 115.4 - 2.4 126.3 - 2.0 124.8 - 1.9 228.8 - 1.9 229.8 - 1.9 Q3 2012 (1) 115.7 - 2.5 115.2 - 2.5 126.3 - 2.0 124.7 - 1.9 230.0 - 1.7 230.2 - 1.7 Q4 2012 (1) 116.9 - 2.5 116.4 - 2.4 127.1 - 2.0 125.4 - 1.9 231.7 - 2.1 230.9 - 2.1 Q1 2013 (1) 116.7 - 2.1 116.2 - 2.0 127.7 - 1.9 125.9 - 1.7 233.0 - 2.0 232.6 - 2.0 Q2 2013 (1) 118.0 - 1.9 117.5 - 1.8 128.6 - 1.8 126.8 - 1.6 234.2 - 2.4 235.2 - 2.4 Jan-12 113.4 -0.8 2.7 112.96 -0.8 2.6 124.7 -0.4 2.3 123.06 -0.4 2.3 227.5 0.2 2.9 226.67 0.4 2.9 Feb-12 114.0 0.5 2.7 113.53 0.5 2.7 125.2 0.4 2.3 123.58 0.4 2.2 228.4 0.4 2.9 227.66 0.4 2.9 Mar-12 115.5 1.3 2.7 115.03 1.3 2.6 126.2 0.8 2.3 124.63 0.8 2.2 229.1 0.3 2.6 229.39 0.8 2.7 Apr-12 116.0 0.5 2.6 115.56 0.5 2.5 126.4 0.1 2.1 124.80 0.1 2.0 229.2 0.0 2.3 230.09 0.3 2.3 May-12 115.9 -0.1 2.4 115.38 -0.2 2.3 126.3 -0.1 2.0 124.73 -0.1 1.9 228.5 -0.3 1.7 229.82 -0.1 1.7 Jun-12 115.8 -0.1 2.4 115.29 -0.1 2.3 126.4 0.0 1.9 124.78 0.0 1.9 228.6 0.0 1.7 229.48 -0.1 1.7 Jul-12 115.1 -0.5 2.4 114.65 -0.6 2.3 125.8 -0.4 1.9 124.22 -0.4 1.9 228.7 0.0 1.4 229.10 -0.2 1.4 Aug-12 115.6 0.4 2.6 115.10 0.4 2.5 126.6 0.7 2.1 125.06 0.7 2.0 230.1 0.6 1.7 230.38 0.6 1.7 Sep 12 (1) 116.4 0.7 2.6 115.93 0.7 2.5 126.4 -0.2 2.0 124.86 -0.2 1.9 231.2 0.5 1.9 231.17 0.3 1.9 Oct 12 (1) 116.8 0.3 2.5 116.27 0.3 2.5 126.9 0.3 2.1 125.16 0.2 2.0 231.3 0.0 2.0 230.86 -0.1 2.0 Nov 12 (1) 116.7 0.0 2.4 116.24 0.0 2.4 127.0 0.1 1.9 125.30 0.1 1.9 231.8 0.2 2.1 231.01 0.1 2.1 Dec 12 (1) 117.1 0.3 2.4 116.60 0.3 2.4 127.5 0.4 1.9 125.82 0.4 1.9 232.2 0.2 2.3 230.77 -0.1 2.3 Jan 13 (1) 116.0 -1.0 2.3 115.44 -1.0 2.2 127.1 -0.3 2.0 125.28 -0.4 1.8 232.6 0.2 2.2 231.72 0.4 2.2 Feb 13 (1) 116.5 0.4 2.2 115.91 0.4 2.1 127.7 0.5 2.0 125.91 0.5 1.9 233.0 0.2 2.0 232.23 0.2 2.0 Mar 13 (1) 117.7 1.0 1.9 117.13 1.1 1.8 128.3 0.5 1.7 126.52 0.5 1.5 233.4 0.2 1.9 233.74 0.7 1.9 Apr 13 (1) 117.9 0.2 1.6 117.38 0.2 1.6 128.5 0.2 1.7 126.72 0.2 1.5 233.8 0.2 2.0 234.74 0.4 2.0 May 13 (1) 118.0 0.1 1.9 117.47 0.1 1.8 128.6 0.1 1.8 126.82 0.1 1.7 234.2 0.2 2.5 235.52 0.3 2.5 Jun 13 (1) 118.2 0.1 2.1 117.62 0.1 2.0 128.6 0.0 1.8 126.81 0.0 1.6 234.6 0.1 2.6 235.43 0.0 2.6 Updated Next Release Sep 14 September Flash (Sep 28) Sep 12 September CPI (Oct 11) Sep 14 September CPI (Oct 16) Source: BNP Paribas, (1) Forecasts 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 -0.5 Chart 4: Eurozone HICP (% y/y) -1.0 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 Source: Reuters EcoWin Pro Core HICP Headline HICP Inflation ticked up to 2.6% y/y in August, largely on the back of energy prices. We expect only a slight moderation over the rest of this year, while base effects from energy should mean the annual rate falls more swiftly in early 2013. Core price pressures remain subdued, with indirect taxes the only significant source of upward pressure. 6 5 4 3 2 1 0 -1 -2 Chart 5: US CPI CPI % y/y - Contribution to Inflation Energy Food Core (ex-food & energy) -3 Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May 08 09 10 11 12 Source: Reuters EcoWin Pro Headline inflation picked up in August, accelerating to 1.7% y/y as previously favourable base effects from energy dissipated, though core inflation continued to moderate. We expect continued core price moderation in the coming months. Catherine Colebrook 20 September 2012 Market Mover 33 www.GlobalMarkets.bnpparibas.com
Page 1 and 2: Market Economics | Interest Rate St
Page 3 and 4: Spain set to present its new budget
Page 5 and 6: The methodology All of the above in
Page 7 and 8: Ireland: What to Expect When You Ar
Page 9 and 10: Spain: Inching Closer to a Request
Page 11 and 12: UK Inflation: No Pressure • UK in
Page 13 and 14: US Housing: New Channels for Policy
Page 15 and 16: Japan: The Eastern Fiscal Cliff •
Page 17 and 18: an agreement that all budget-relate
Page 19 and 20: This section is classified as non-o
Page 31: This section is classified as non-o
Page 35 and 36: Table 3: BNP Paribas' Inflation For
Page 43 and 44: Economic Calendar: 21 - 28 Sep (con
Page 45 and 46: Key Data Preview Chart 1: UK Cumula
Page 47 and 48: Key Data Preview Chart 5: German He
Page 49 and 50: Key Data Preview Chart 9: German ES
Page 51 and 52: Key Data Preview Chart 13: Japanese
Page 53 and 54: Key Data Preview 7000 6500 6000 550
Page 55 and 56: Treasury and SAS Issuance Calendar
Page 57 and 58: Central Bank Watch Interest Rate EU
Page 61: For Production and Distribution, pl

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