Erste Bank Research Team
Erste Bank
EZ Inflation for September expected
Next week (September 29), a first flash estimate of Eurozone inflation in September is expected. In August, inflation fell slightly to 5.2%. While the downward pressure from energy prices has eased slightly, the momentum of food prices has continued to decline. Core inflation also fell slightly for the first time in a while.
Core inflation declines slightly for the first time in August
EZ Inflation weighted by components Y/Y
Source: Eurostat, Erste Group Research
The recent rise in the oil price represents an uncertainty factor for inflation in September. As a result, energy inflation could gain further slight momentum. By contrast, the downward trend in food prices should continue. In addition, core inflation (inflation adjusted for energy and food prices) is expected to decline again slightly. This is mainly due to a special statistical effect from Germany, as a result of which core inflation in Germany should fall noticeably in September. Overall, the inflation rate in September should fall compared with August.
From the ECB's perspective, further progress in bringing core inflation down remains important for the future direction of monetary policy. The goods component of core inflation has already been on a visible downward trend for several months. Due to the sharp drop in producer prices, this trend is likely to continue in the coming months. By contrast, services price momentum has initially stabilized at a high level over the past few months.
Now that economic momentum has also weakened significantly in the services sector, the likelihood of declining inflationary momentum in services in the coming months has increased. The already declining trend in hourly labor costs also points to falling momentum in services prices in the near future. In 2Q23, these were down for the second quarter in a row, rising by just 4.5% y/y. Due to the personnel intensity, the development of wage and labor costs is particularly important for the further development of prices in the services sector. Based on these factors, we also expect prices for service providers to lose momentum in the near future.
This document is intended as an additional information source, aimed towards our customers. It is based on the best resources available to the authors at press time. The information and data sources utilised are deemed reliable, however, Erste Bank Sparkassen (CR) and affiliates do not take any responsibility for accuracy nor completeness of the information contained herein. This document is neither an offer nor an invitation to buy or sell any securities.
Recommended Content
Editors’ Picks
EUR/USD bounces back, trades above 1.0860
EUR/USD bounced from a fresh weekly low of 1.0827, as the US Dollar lost steam following a weak ISM Manufacturing PMI report and words from Federal Reserve Chair Jerome Powell. Powell reiterated its hawkish message, dismissing potential rate cuts in the near future.
GBP/USD turns north ahead of the weekly close, approaches 1.2700
GBP/USD extended its rebound from near 1.2600 and is approaching 1.2700 on the back of a weaker US Dollar. The Greenback accelerated to the downside following comments from Fed’s Powell.
Gold resumes advance and approaches record highs
Gold remains near record highs and achieved its highest monthly close ever in November. Global bond yields continue to decline as inflation further cools, supporting the upside in XAU/USD. With central banks expected to remain on hold, the focus will be US labor market data.
Solana likely to extend gains as DeFi airdrop season could boost user base
Solana ecosystem will see airdrops from projects like Jupiter, Marginfi, Drift, Zeta and Jito. Solana users are projected to increase between 30% and 80% from native token launches, according to Messari’s latest report. SOL price extends rally, yielding nearly 4% daily gains.
Tesla Stock News: Cybertruck excitement fails to sustain TSLA price as chart signals more downside
TSLA stock sinks three days in a row despite Cybertruck unveiling. Analysts conclude that Cybertruck will find it difficult to turn a profit. TSLA stock is the midst of forming a bearish Three Black Crows pattern on the daily chart.