Commenting on the latest European inflation data published this week, Dr Neil Blake, head of UK and EMEA Research at CBRE, said: “The November inflation numbers in Spain and Italy confirmed the low inflationary pressures evident in the data for Germany, France and Sweden released yesterday. Headline inflation fell in every country except Italy (where it stabilised) and now ranges from -0.4% in Spain to +0.6% in Germany.

“At first sight, these data add to fears that a number of European countries may be heading for a period of damaging deflation but the headline data can be misleading. Estimates of underlying inflation which excluded energy and food (definitions differ by country) increased to 1% in Sweden, is hovering around 1.25% in Germany and at around 0.5% in France and Italy. Only Spain is actually seeing year on year falls in underlying prices. The reason for the difference between headline and underlying inflation is the recent steep falls in commodity prices, especially oil prices.

“In October, UK inflation at 1.3% headline and 1.5% underlying is comfortably above Eurozone rates. With UK inflation data to be released next week, we can expect a further widening between headline and underlying inflation as a result of falling energy prices. As in the rest of Europe, this will have a positive impact on real income and consumer spending power in the UK.”