Euro Area: Inflation picks up in July from the prior month
Latest reading: Harmonized consumer prices increased 3.0% in annual terms in July, following a 2.8% rise in the previous month and remaining well above the ECB’s 2.0% target. The uptick was largely driven by a renewed surge in energy prices amid the resumption of hostilities between the U.S. and Iran.
Relative to the prior month’s data, there were higher price pressures for energy prices (+10.3% on a year-on-year basis vs +8.6% in June) and non-energy industrial goods (+0.9% vs +0.7% in June). In contrast, price pressures reduced for food, alcohol and tobacco in July (+1.2% vs +1.5% in June). Finally, the variation in services prices was the same as in the prior month (+3.3% in July and June).
Meanwhile, core consumer prices increased 2.5% in annual terms in July, following a 2.4% increase in the prior month.
Lastly, harmonized consumer prices increased 0.21% in July on a month-on-month basis, following a 0.10% fall in the previous month.
Panelist insight: Commenting on the outlook, Nomura’s analysts stated:“The immediate dynamics of HICP inflation will continue to be driven by oil prices?. It will take longer for the rise in energy commodity prices to affect core goods prices and even longer to result in second-round inflation effects.”