August: +0.4% m/m, +2.6% y/y
July: -0.5% m/m, +2.4% y/y
June: -0.1% m/m, +2.4% y/y
May: -0.1% m/m, +2.4% y/y
April: +0.5% m/m, +2.6% y/y
March: +1.3% m/m, +2.7% y/y
—
FRANKFURT (MNI) – Eurozone inflation accelerated to an annual rate
of +2.6% in August as expected on the back of costlier energy and food,
while the core rate fell to a six-month low, Eurostat reported on
Friday.
On the month, consumer prices rose 0.4%, also as widely forecast.
The 2.4% increase in energy prices, the strongest jump since
January, lifted the annual rate to +8.9%, with components adding 0.66
point to headline inflation.
Food, drink and tobacco prices were flat on the month, as the 0.1%
rise in alcohol and tobacco offset modestly cheaper food. However, jumps
in the yearly rates for tobacco and fruit raised the group rate to
+3.0%.
Core inflation, which excludes energy, food, alcohol and tobacco
slowed to +1.5%, the lowest annual rate since February.
Excluding energy and unprocessed foods, the ECB’s preferred
measure, core inflation came to +1.7%, the lowest annual rate in a year.
Adverse weather conditions in the U.S. over the summer led to
record prices for corn, as well as significant jumps in the price of
other agricultural commodities.
However, a recent European Central Bank report played down the
potential spillover to Eurozone consumer food prices, noting that EU
internal market price movements, which have a relatively strong
passthrough to HICP food inflation, have been more subdued than those of
international food prices.
The report also highlighted that regional and supply-side factors
were the main reasons behind the price jump rather than global factors
that would influence a wider range of food commodities.
“Against this background, euro area consumer food prices (in
particular prices for processed food) are expected to continue
diminishing over the next few months from the elevated levels seen at
the end of 2011,” the report concluded.
While input price pressures increased moderately in August,
according to the PMI poll, a lack customers and strong competition
forced firms to continue offering discounts.
Eroding business prospects have led ever more firms to lower their
selling price expectations in all sectors except industry, a European
Commission survey showed. Nevertheless, consumers’ inflation worries
increased for the second month in a row in August.
The ECB staff’s latest forecast point to inflation ranging between
+2.4% and +2.6% this year, with a midpoint of +2.5%, up from June’s
+2.4%. For 2013, HICP is expected between +1.3% and +2.5%, with the
+1.9% midpoint 0.3 percentage point higher than three months ago.
“On the basis of current futures prices for oil, inflation rates
could turn out somewhat higher than expected a few months ago, but they
should decline to below 2% again in the course of next year,” ECB
President Mario Draghi said last week.
“Over the policy-relevant horizon, in an environment of modest
growth in the euro area and well-anchored long-term inflation
expectations, underlying price pressures should remain moderate,” Draghi
said.
— Frankfurt bureau: +49 69 720 142; e-mail: frankfurt@mni-news.com —
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