Euro Area: Inflation at over two-and-a-half-year high in July
Harmonized inflation came in at 2.2% in July, above June’s 1.9% and marking the highest print since October 2018. Inflation therefore landed above the European Central Bank’s target rate of 2.0%. July’s result was due to sharper increases in prices for energy, food, alcohol and tobacco and services, while the increase in prices for non-energy industrial goods softened.
On a monthly basis, harmonized prices dipped 0.1% in July, contrasting June’s 0.3% increase. Core inflation, which excludes volatile energy and unprocessed foods prices, was stable at 0.9% in July.
A complete set of data for harmonized inflation will be released on 18 August.
Commenting on the short-term outlook for inflation, Bert Colijn, senior economist at ING, stated:
“We expect both services and goods inflation to trend higher in the coming months and food and energy prices have outperformed our expectations so far. This adds to upside inflation risk for the months ahead.”