Eurozone’s final August HICP inflation likely to stay at 0.2 pct

Euro area’s final HICP inflation is expected to have come in the same as flash estimate in August. According to a Societe Generale research note, the final HICP inflation print is likely to have confirmed the flash reading of 0.2 percent year-on-year. This is stable as compared to July. Core inflation weakened slightly to 0.8 percent in annual terms.

Meanwhile, the flash reading showed that the energy component, in spite of recording a monthly fall, rebounded from -6.7 percent year-on-year in July to -5.7 percent in August. Meanwhile, food prices weakened a bit to 1.3 percent year-on-year in August after recovering markedly in July.

The weaker core inflation print was due to subdued services and non-energy industrial goods prices that dropped a tick each. The headline HICP inflation in the euro area is expected to continue rebounding and might accelerate above 1 percent by the end of 2016 because of large base effects, added Societe Generale. Meanwhile, core inflation is expected to rebound at a slower rate.