A (largely seasonal) 0.3 percent monthly fall in prices put Eurozone HICP inflation at a final 2.1 percent annual rate in July, in line with the flash estimate and on the strong side of 2 percent for the first time since 2012.
More importantly, the core rates were similarly unrevised. Hence, the narrowest measure, which excludes energy, food, alcohol and tobacco, declined a monthly 0.5 percent for a 1.1 percent yearly rise, also matching its preliminary print and fully reversing June's slide. Omitting just energy and unprocessed food, the annual rate was confirmed at 1.3 percent, up from a final 1.2 percent last time and identical to the results posted by core without energy and seasonal food.
Headline inflation continues to be buoyed high energy prices, currently running at a 9.5 percent annual rate, up from 8.0 percent in June. The food, alcohol and tobacco category (2.5 percent after 2.7 percent) also remains disproportionately firm, albeit softer than in June. At 1.4 percent, the rate in services was a tick above the previous month but still short of the 1.6 percent posted in May (and in July 2017) while its non-energy industrial goods counterpart was a lowly 0.5 percent, marginally firmer than June's 0.4 percent mark but only matching its year ago reading
Today's unrevised HICP update should have few immediate implications for ECB policy. Even so, the bottom line is that underlying prices are still rising too slowly and by the time of its next meeting (September 13th) the central bank will be hoping that core inflation has at least gained a little additional momentum.
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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