The flash HICP was unrevised in the final report for June. A 0.1 percent monthly increase in prices put the annual inflation rate at 2.0 percent, in line with its flash estimate and a tick higher than its final print in May.
More importantly however, the core measures were mixed. Hence, the yearly rate of the narrowest gauge, which excludes energy, food, alcohol and tobacco, was trimmed from its preliminary 1.0 percent to 0.9 percent. This was 0.2 percentage points below its final May outturn and compares with a 1.0 percent rate at the start of the year and the 1.1 percent posted in June 2017. Omitting just energy and unprocessed food, inflation was unrevised at 1.2 percent, although this was also a tick less than in mid-quarter. Similarly, without only energy and seasonal food, inflation was 1.2 percent, down from 1.3 percent in May.
Amongst the major components, the annual rate for non-energy industrial goods edged up from 0.3 percent to 0.4 percent but services saw a 0.3 percentage point drop to 1.3 percent, also 0.3 percentage points short of its mark in June 2017. Food, alcohol and tobacco inflation was 0.2 percentage points firmer at 2.7 percent and energy was up from 6.1 percent at 8.0 percent.
Ahead of next week's ECB meeting today's inflation update is unlikely to have much impact on the central bank's thinking. If the June meeting proposals are adhered to, policy has already been set through year-end. However, it remains clear that underlying inflation is going nowhere in a hurry and without some pick-up in the rate soon, pressure to extend QE into 2019 can only intensify.
The harmonised index of consumer prices (HICP) is a measure of consumer prices used to calculate inflation on a consistent basis across the European Union. Changes in the index provide an estimate of inflation, as targeted by the European Central Bank (ECB). Eurostat provides statistics for the EU and Eurozone aggregates, individual member states and for the major subsectors. Over the short-term, the central bank focusses on a number of core measures which seek to strip out the most volatile components and so give a much better guide to underlying developments. Amongst these, financial markets normally concentrate upon the narrowest gauge which excludes energy, food, alcohol and tobacco.
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