MNI: Euro Area HICP Up in July, Core Up too

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

By Jamie Satchithanantham

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

inflation clawing back the losses notched in June, a flash report published by

Eurostat showed Tuesday.

     Euro area annual inflation is expected to have accelerated to 2.1% in July,

up 0.1pp from June, and above analysts' expectations for an unchanged outcome. 

     The result means euro area inflation remained 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 expected to be provided by energy once

again. On an annual basis prices were seen to have grown by 9.4% in July, 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 seen picking up in July,

rising 0.2pp to 1.1% and signalling underlying inflationary pressures. Analysts

had pencilled in only a 0.1pp rise in July.

     --SLOWER GROWTH 

     Elsewhere, other data released by Eurostat Tuesday showed GDP growth

slowing to 0.3% in the second quarter of the year, down 0.1pp from Q1, and

markedly lower from the 0.7% in the final two quarters of 2017. 

     The data suggests euro area economic momentum has been lost after a stellar

2017, possibly pointing to downside inflationary pressures in the medium term

should the more subdued trend of economic growth persist.  

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

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