According to Eurostat, the European Union's statistical service, the August consumer price inflation in the euro area was just slightly lower than the initial projection. That being said, it remained significantly above the European Central Bank's target level, surpassing it by more than double.
Eurostat's data reveals that inflation in the 20 euro area countries stood at 0.5% for the month of August and reached 5.2% in annual terms. These figures show a decrease from the initial estimate released on August 31, which indicated an annual rate of 5.3%. It's important to note that the European Central Bank's objective is to keep inflation at a 2.0% level in the medium term.
Core inflation, which leaves out energy and unprocessed food prices, remained consistent with initial projections at 0.3% on a monthly basis in August and 6.2% on an annual basis.
A narrower inflation measure, one that excludes alcohol and tobacco, frequently examined by many economists, registered at 0.3% monthly and 5.3% annually, aligning with the data reported on August 31.
According to Eurostat, the most significant contributor to the annual figure in August was the rise in the cost of services, which was responsible for the increase of 2.41%. In addition, the costs of food, alcohol, and tobacco collectively contributed to an inflation uptick of 1.98%, with industrial goods prices adding 1.19% to this increase. The decline in energy prices led to a decrease of 0.34% in inflation.
In order to reach its inflation goal, the ECB recently hiked its deposit rate to an all-time high of 4% and hinted at the possibility of a future deceleration, leading market speculations to suggest that the next move might be a reduction, potentially as soon as late spring 2024.
On Monday, European Central Bank Governing Council member Peter Casimir suggested that the most recent rate hike on Thursday could be the last for the time being, but that it would take until March for policymakers to be certain that further rate hikes were not ruled out.Login in Personal Account