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MNI Eurozone Inflation Insight – June 2024

EUROPEAN INFLATION
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Services Remain The Sticking Point

  • Eurozone core inflation surprised marginally to the upside in June, with the 2.86% Y/Y unrounded print enough to surprise analyst expectations to the upside by one-tenth of a percentage point on a rounded basis.
  • Familiar themes remained at play though. Services HICP was 4.1% Y/Y for the second consecutive month, while core goods inflation remained soft at 0.7% Y/Y. Meanwhile, headline inflation met consensus at 2.5% Y/Y.
  • With few idiosyncratic factors at play in June (bar the European football championships in Germany), the data provided a “clean” read on underlying inflation persistence relative to prior months.
  • With services HICP still sticky, and the ECB’s seasonally adjusted data indicating that core momentum remains reasonably strong, we don’t think the June flash round warrants any material change in ECB rhetoric ahead of the July 18 meeting.
  • Our review of June's preliminary Eurozone inflation data includes breakdowns and analysis of the national inflation prints, and some sell-side reactions.

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Services Remain The Sticking Point

  • Eurozone core inflation surprised marginally to the upside in June, with the 2.86% Y/Y unrounded print enough to surprise analyst expectations to the upside by one-tenth of a percentage point on a rounded basis.
  • Familiar themes remained at play though. Services HICP was 4.1% Y/Y for the second consecutive month, while core goods inflation remained soft at 0.7% Y/Y. Meanwhile, headline inflation met consensus at 2.5% Y/Y.
  • With few idiosyncratic factors at play in June (bar the European football championships in Germany), the data provided a “clean” read on underlying inflation persistence relative to prior months.
  • With services HICP still sticky, and the ECB’s seasonally adjusted data indicating that core momentum remains reasonably strong, we don’t think the June flash round warrants any material change in ECB rhetoric ahead of the July 18 meeting.
  • Our review of June's preliminary Eurozone inflation data includes breakdowns and analysis of the national inflation prints, and some sell-side reactions.

PDF Here