Euro Area Inflation July 2020

Euro Area: Inflation inches up on rising goods inflation in July

July 31, 2020

Harmonized inflation rose to 0.4% in July from June’s 0.3%, according to a flash estimate released by Eurostat on 31 July. Inflation thus moved closer to the European Central Bank’s target rate of near, but under, 2.0%. July’s pick-up was due to a faster increase in prices for non-energy industrial goods as well as to a softer fall in energy prices. On the other hand, prices for services and for food, alcohol and tobacco rose at a slower clip than in June.

On a monthly basis, harmonized prices fell 0.3% in July, contrasting June’s 0.3% increase. Core inflation, which excludes volatile energy and unprocessed foods prices, rose to 1.3% from June’s 1.1%.

A complete set of data for harmonized inflation will be released on 19 August.

Commenting on the release, Bert Colijn, Eurozone senior economist at ING, stated:

“Overall, as unemployment is set to continue to rise in the months ahead and output remains well below the 4Q19 levels for a long time to come, inflation is unlikely to move anywhere close to the European Central Bank's target of just below 2% in the near term.”

FocusEconomics Consensus Forecast participants expect harmonized inflation to average 0.5% in 2020, which is down 0.1 percentage points from last month’s forecast. For 2021, panelists expect harmonized inflation to average 1.2%.


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Euro Area Inflation July 20 20

Note: Year-on-year and month-on-month var. of harmonized consumer price index (HICP) in %.
Source: Eurostat


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