MNI DATA ANALYSIS: Euro Area PPI Edges Higher in July

--EMU July HICP +4.0% y/y vs June +3.6% y/y

By Jamie Satchi

     LONDON (MNI) - Euro area industrial price pressures intensified further in

July, with annual growth in input prices rising to the highest level since April

2017, data published by Eurostat showed Tuesday.

     Euro area industrial producer prices, non seasonally adjusted, rose by 0.4%

between June 2018 and July 2018, up 0.3% m/m a month prior. This meant that on

the year industrial prices rose by 4.0% -- the highest figure recorded in 15

months (assuming no revisions to back data). 

     Across the EU28, prices were up 0.3% m/m in July, 0.2pp weaker than its

June showing, for a 4.7% y/y rise.  

     --ENERGY PRICES REMAIN FIRM

     The bulk of upward pressure was, once again, provided by energy. Euro area

energy prices held steady at 1.1% m/m in July, though lower than the local peak

of 2.7% in May. 

     On an annual basis, energy prices were up 10.7%, the third successive rise,

and up from 9.5% y/y in June. 

     Highlighting the impact of energy prices, core input PPI rose by just 0.1%

m/m in July, down from 0.2% in June. 

     Price growth across all other categories remained subdued in comparison,

with intermediate goods, capital goods, durable consumer goods and non-durable

consumer goods prices all rising by 0.1% m/m.    

     --HICP IMPLICATIONS

     The data support the idea that the boost to headline inflation is likely

transitory and boosted by energy, an effect which should fade as the year

progresses and base effects wash out. 

     Consumer prices were judged to have grown by 2% in August, a flash HICP

estimate showed Aug 31, down from July's five-and-a-half-month of 2.1% and

closer to the ECB's target of "below, but close to, 2%".  

--MNI London Bureau; +44 203-586-2226; email: jamie.satchithanantham@marketnews.com

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