Eurozone Inflation


Flash estimate shows inflation stabilizing in August

According to a flash estimate released by Eurostat on 31 August, inflation in the Eurozone—measured by the harmonized index of consumer prices, HICP—remained unchanged in August at July’s 0.2%. The reading came in above the 0.1% increase the markets had expected. According to Eurostat, the subdued print continued to reflect that lower energy prices compensated for higher prices for food, alcohol and tobacco. Inflation continues to hover in what ECB President Mario Draghi called the “danger zone” of below 1.0%. Month-on-month price variations and a more detailed set of data will be provided on 16 September.

Meanwhile, more complete data for July showed that consumer prices fell 0.6% over the previous month, which came in below the flat reading recorded in June. With inflation at 0.2% in July, 9 of the 19 Eurozone economies showed inflation rates equal or above the regional average. Malta and Austria were the Eurozone economies that showed highest inflation rates, recording 1.2% and 1.1%, respectively. At the other end of the spectrum, Cyprus (-2.4% year-on-year) and Greece (-1.3% yoy) were the Euro area economies with lower inflation rates. Among the major economies, in Germany harmonized inflation stabilized in July at June’s 0.1% and in France it inched down from 0.3% in June to 0.2% in July. In Italy, inflation rose to 0.3% (June: +0.2% yoy), while in Spain it remained flat again in July.

FocusEconomics Consensus Forecast participants see inflation in the Euro area averaging 0.2% in 2015, which is up 0.1 percentage points from last month’s forecast. For 2016, panelists expect inflation to average 1.3%.

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Eurozone Inflation Chart

Euro Inflation by country July 2015 0

Note: Year-on-year var. of harmonized consumer price index (HICP) in %. Data is for July.
Source: Eurostat

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