Softening Services Underline Signs Of A Core Inflation Peak (1/2)

Eurozone August flash headline HICP printed 5.3% Y/Y and 0.6% M/M (vs 5.3% Y/Y and -0.1% M/M prior), roughly in line with expectations. Core HICP was 5.3%, a small step down from July and generally in line with expecations made before and after the national

• Monthly core HICP re-entered inflationary territory at 0.3% M/M (vs -0.1% prior), while services saw a welcomed sequential monthly step down to 0.2% M/M (from 1.3% prior). MNI's momentum indicators show that services and core momentum moderated slightly in August, which will be viewed by the ECB as another step in the right direction.
• Overall the August report leaves a September ECB hike in the balance, with too little disinflationary progress for comfort, but leaving enough ambiguity about the persistence of price pressures to reconsider further tightening.
• Our review of August's preliminary Eurozone inflation data includes breakdowns and analysis of the national inflation prints, and some sell-side reactions.
• The full PDF analysis can be found here.