Eurozone Inflation Stagnates Ahead Of ECB September Meeting

Summary

• Inflation in the eurozone did not fall in August, which could tip the ECB in favour of a final 25bp hike at the governing council meeting in two weeks' time.
• Still, overall inflation dynamics remain relatively benign, and we still expect inflation to trend much lower at the end of the year.
• Given the ECB mantra over recent months that doing too little is worse than doing too much in terms of hikes, we still expect another 25 basis point rate rise, despite this being a close call.

Heidloss Tilo Geringswald Felix GbR

By Bert Colijn

The eurozone inflation rate was stable at 5.3% in August, with core inflation also dropping to 5.3% (from 5.5% in July). Headline inflation was slightly higher than expectations due to energy price developments, which increased by 3.2% month-on-month. This