MNI: Euro Area Final HICP Above ECB Target In Jul, Core Up Too

--EMU July HICP +2.1% y/y vs June +0.9% y/y

By Katherine Simmons

     LONDON (MNI) - Euro area inflation inched higher in July, with core

inflation clawing back the losses notched in June, data published by Eurostat

showed Friday.

     Euro area annual inflation was confirmed at 2.1% in July, up 0.1pp from

June, in line with analysts expectations for the final data.

     The result means euro area inflation remains above the European Central

Bank's target of "below, but close to, 2%", consistent with price stability.

     --FUEL ACCELERATION

     The bulk of upward pressure was provided by energy once again. On an annual

basis prices were seen to have grown by 9.5% in July (9.4% in preliminary

report), up from 8.0% and 6.1% in June and May respectively.

     This was supported by an uptick in services inflation, up 0.1pp to 1.4%,

and non-energy industrial goods prices, also up 0.1pp to 0.5%.

     Offsetting this was a slight decline in food, alcohol and tobacco prices,

which was estimated to have fallen back to May's level of 2.5% after rising to

2.7% in June.

     --CORE HICP UP TOO

     Stripping out erratics, core inflation was also confirmed picking up in

July, rising 0.2pp to 1.1%, signalling some, albeit modest, underlying

inflationary pressures.

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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