Euro area’s final HICP inflation likely to have confirmed flash reading of 0.2 pct in July

Euro area’s final HICP inflation for July is likely to have confirmed the flash reading. According to a Societe Generale’s research report, the final HICP inflation print is expected to have come in the same as the flash estimate of 0.2 percent year-on-year in July, a tad higher than June’s print. The flash reading showed that core inflation continues to be stable at 0.9 percent year-on-year.

Increased food prices, which rose to 1.4 percent year-on-year from 0.9 percent, mainly drove up inflation in the currency bloc. Food prices contributed 10 basis points to the headline print. In the meantime, the energy component softened slightly to -6.6 percent year-on-year in July from -6.4 percent due to the renewed weakness in petroleum prices.

The stability in the core print was due to the gradual recovery in services inflation, which is expected to have been driven by package holidays. Services inflation recovered to 1.2 percent year-on-year from 1.1 percent in June as non-energy industrial goods prices remained stable at 0.4 percent.

“Euro area headline HICP inflation should continue to recover and is likely to climb above 1.0 percent by the end of the year due to large base effects from energy prices, while core inflation is likely to recover at a sluggish pace,” added Societe Generale.