Headline annual inflation in the Eurozone fell again in August following increases in May and July, and the decrease should support calls for a European Central Bank rate cut in less than two weeks.
The EU statistics office Eurostat said its initial estimate for headline annual consumer price growth in the euro area this month fell in line with market forecasts to 2.2% from 2.6% in July. The August rate was the lowest since July 2021.
The ECB inflation target is 2% over the medium term.
The core inflation rate, which excludes volatile items such as energy, ticked lower to 2.8% as expected, dropping it from 2.9%, a mark held in four of the last five months.
On the subject of the core rate, often considered a more important gauge for ECB officials, Oliver Rakau tweeted, “The most sophisticated way of extracting CPI implications (…) continues to point to core inflation momentum easing towards 2% by year-end.”
The Eurostat report said services remained the main driver of price growth with a rise of 4.2% y/y after holding at or above 4% for the past three months.
Energy prices declined at an annual rate of 3%, according to the data.
August’s monthly inflation rate increased to 0.2% – the market forecast – from a flat reading last month. Energy prices fell 1% from July.
The ECB held rates steady last month after shaving 25 basis points from its key rates in early June. Following the release of the preliminary August inflation data, traders were pricing in rate cuts for September, December, and March.
The latest consumer price report and rising concerns about a dip in European economic activity are likely to increase the odds of an ECB rate cut on 12 September. German investor morale and business confidence have continued to weaken, and a number of PMIs have fallen in the currency area, making lower borrowing costs to fuel growth that much more attractive.
“Incoming European data point to another rate cut in September,” Danske Bank’s Piet Haines Christiansen wrote on X. “However, do not expect a dovish communication with clear commitment to a specific path delivered at the meeting, but rather the need for a continued restrictive monetary policy stance.”
National data set the tone
Preliminary readings from Europe’s four biggest economies pointed to the euro area decline. Spain said early Thursday that its headline annual EU-harmonised inflation fell to 2.4% versus the 2.5% estimate and last month’s 2.9%.
Later in the day, Germany, Europe’s largest economy, posted EU-harmonised inflation of 2%, which compared to the 2.3% forecast and 2.6% in July.
France said early Friday morning that HICP fell to 2.2%, which was above the economists’ consensus of 2.1% but well below last month’s 2.7%.
Italy reported consumer price growth of 1.3% in line with the market outlook and under the 1.6% from July.
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data_array.from_react = data.from_react;
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postMessage({action: 'PublisherChannelJoined' });
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postMessage(data);
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session_info.session_email = data.session_email;
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session_info.php_session_id = data.php_session_id;
session_info.application_name = data.application_name;
session_info.http_referrer = data.http_referrer;
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function start_log() {
var session_start_date = new Date();
session_start_time = session_start_date.getTime();
var months = ['Jan','Feb','Mar','Apr','May','Jun','Jul','Aug','Sep','Oct','Nov','Dec'];
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data_array.username = session_info.session_email;
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data_array.webrtc_protocol = '';
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data_array.stream_name = session_info.stream;
data_array.session_start_date = session_start_date_string;
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function update_session_info(data) {
var data_array = {};
var msg_string = '';
var current_date = new Date();
var current_time = current_date.getTime();
session_info.protocol = data.protocol;
session_info.curr_delay = (data.effective_latency / 1000).toFixed(2);
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session_info.jitter = data.jitter;
session_info.packet_loss = data.packet_loss;
session_info.effective_latency = data.effective_latency;
session_info.mean_opinion_score = data.mean_opinion_score;
session_info.restarts = data.restarts;
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data_array.mean_opinion_score = session_info.mean_opinion_score;
data_array.session_id = session_info.session_id;
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data_array.session_id = session_info.session_id;
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data_array.restarts = session_info.restarts;
data_array.threshold = 0;
data_array.curr_delay = session_info.curr_delay;
data_array.session_length = session_info.session_length;
data_array.date = current_time;
data_array.webrtc_protocol = session_info.protocol;
data_array.ping_time = session_info.ping_time;
data_array.jitter = session_info.jitter;
data_array.packet_loss = session_info.packet_loss;
data_array.effective_latency = session_info.effective_latency;
data_array.mean_opinion_score = session_info.mean_opinion_score;
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socket_emits++;
if (socket_emits == 100) { socket_emits = 0; }
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- Core price growth edges lower
- Headline inflation nears ECB target
- Traders still betting on two cuts this year
By Eric Culp, European Editor
LiveSquawk News
@EricCulpLS
30 Aug 2024 | 10:45 GMT
Headline annual inflation in the Eurozone fell again in August following increases in May and July, and the decrease should support calls for a European Central Bank rate cut in less than two weeks.
The EU statistics office Eurostat said its initial estimate for headline annual consumer price growth in the euro area this month fell in line with market forecasts to 2.2% from 2.6% in July. The August rate was the lowest since July 2021.
The ECB inflation target is 2% over the medium term.
The core inflation rate, which excludes volatile items such as energy, ticked lower to 2.8% as expected, dropping it from 2.9%, a mark held in four of the last five months.
On the subject of the core rate, often considered a more important gauge for ECB officials, Oliver Rakau tweeted, “The most sophisticated way of extracting CPI implications (…) continues to point to core inflation momentum easing towards 2% by year-end.”
The Eurostat report said services remained the main driver of price growth with a rise of 4.2% y/y after holding at or above 4% for the past three months.
Energy prices declined at an annual rate of 3%, according to the data.
August’s monthly inflation rate increased to 0.2% – the market forecast – from a flat reading last month. Energy prices fell 1% from July.
The ECB held rates steady last month after shaving 25 basis points from its key rates in early June. Following the release of the preliminary August inflation data, traders were pricing in rate cuts for September, December, and March.
The latest consumer price report and rising concerns about a dip in European economic activity are likely to increase the odds of an ECB rate cut on 12 September. German investor morale and business confidence have continued to weaken, and a number of PMIs have fallen in the currency area, making lower borrowing costs to fuel growth that much more attractive.
“Incoming European data point to another rate cut in September,” Danske Bank’s Piet Haines Christiansen wrote on X. “However, do not expect a dovish communication with clear commitment to a specific path delivered at the meeting, but rather the need for a continued restrictive monetary policy stance.”
National data set the tone
Preliminary readings from Europe’s four biggest economies pointed to the euro area decline. Spain said early Thursday that its headline annual EU-harmonised inflation fell to 2.4% versus the 2.5% estimate and last month’s 2.9%.
Later in the day, Germany, Europe’s largest economy, posted EU-harmonised inflation of 2%, which compared to the 2.3% forecast and 2.6% in July.
France said early Friday morning that HICP fell to 2.2%, which was above the economists’ consensus of 2.1% but well below last month’s 2.7%.
Italy reported consumer price growth of 1.3% in line with the market outlook and under the 1.6% from July.
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