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Soft Food Prices, "Noisy Factors" Eyed In Below-Consensus HICP (2/2)


The following analysts are below-consensus on August HICP:

  • RBC: Core 5.2% Y/Y, Headline 5.2% Y/Y: Main downward contributions to come from food and manufactured goods inflation. Less encouragingly, services inflation is likely to prove more sticky, and may even reach a new record high. A 10% increase in French regulated electricity prices may also support energy inflation this month, although base effects will weigh on electricity and gas inflation elsewhere in the euro area. Looking ahead: Aug likely to prove to be the peak for services inflation which we expect to begin to moderate from September.
  • TD: Core 5.2% Y/Y, Headline 5.2% Y/Y: While continued soft momentum in food and core goods inflation should put further downside pressure, the recent surge in oil prices will keep headline inflation from falling much. Services inflation is still key for the ECB though, and here we see another strong m/m print, though base effects should push the y/y rate down a touch.
  • JPM: Core 5.1% Y/Y, Headline 5.2% Y/Y. ECB SA HICP 0.6% M/M; core 0.4% M/M JPM notes risks to their core forecast “are perhaps skewed a bit to the upside”. Note three noisy factors: upward base effect from German transport tickets, the weights distortion which is still upward (though likely limited impact in August and turning to a drag in Sept), and package holiday inflation being affected in annual terms by a structural break in the German series. “a new methodology is being used this year to collect prices, which causes noise in the annual comparison. This was a drag in July on the annual rate and we assume that this persisted in August.”
  • BofA: Core 5.1% Y/Y, Headline 5.2% Y/Y. Equates to CPI M/M of 0.5% (no core estimate)

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