According to preliminary estimates, the rate of inflation in the Eurozone remained unchanged in July at +1.3 percent. We anticipate little change in the months ahead, so that inflation is likely to tick only slightly upward with just small swings.
The inflation rate trend in the large Eurozone states that also presented a flash estimate for July was unspectacular here too. According to the European Harmonised Index of Consumer Prices (HICP), German consumer prices rose by +1.5 percent over the same month of the previous year. The rate of inflation was therefore just as high as it was in June. Inflation in France even persisted at just +0.8 percent and it stood at +1.2 percent in Italy. In Spain it rose slightly from +1.6 to +1.7 percent.
Where will it go from here? The price of oil, which had caused severe volatility in both directions to the inflation rate in recent years, has been relatively stable in the past few months and was hardly affected by the political tensions in the oil-producing regions of the Middle East. Fluctuation ranged between USD 44 and 56 recently, which was comparatively little compared with the volatility of previous years. Correspondingly, we do not expect significant price changes from this side. Food prices have also settled after weather-induced inflation around the turn of the year 2016/2017. Moderate wage development to date in the Eurozone provides little scope for a demand-driven increase in the price of other goods and services. Against this backdrop, the Eurozone rate of inflation is likely to rise only slightly from its present level in the coming months.