Eurozone August Core HICP as Expected, Headline Inflation Slightly Above Estimates
31 August 2023
By David Barwick - FRANKFURT (Econostream) - Annual euro area overall inflation in August came in at 5.3%, the same as in July, whilst inflation excluding energy, food, alcohol and tobacco also printed 5.3%, after 5.5% the previous month, according to the flash estimate of Eurostat on Thursday.
The headline reading exceeded consensus expectations of 5.1% slightly, whilst the core result was as anticipated.
The latest spot inflation data were keenly awaited, with these being a key input into the monetary policy decision of the European Central Bank Governing Council in two weeks and the decision currently a toss-up between a further rate hike or a pause in the tightening.
The decline in the core reading offers further evidence of weakening inflation that some Council members have characterised as a prerequisite for the ECB to stop putting the brakes on. At the same time, more hawkish members may see the failure of the headline figure to decline further as worrisome.
Monetary authorities have said that their decisions are based on their assessment of the inflation outlook in light of the incoming economic and financial data, the dynamics of underlying inflation, and the strength of monetary policy transmission.