EUROPEAN INFLATION: France June Final HICP Revised Down 0.02ppt vs Flash
France final June HICP was unrevised from flash on a rounded basis, seeing a 0.02ppt downward revision to stand at 2.02% Y/Y in the final reading (2.80% May, 2.48% Apr), keeping it around 0.3ppt softer than pre-flash consensus. National CPI saw also saw a -0.02ppt revision to 1.76% Y/Y (2.42% May, 2.16% Apr). CPI (non-HICP) details below:
- The largest downward revisions were seen in manufactured products and energy, mostly offset by a 0.1ppt upward revision to services CPI.
- Energy CPI was revised -0.14ppt to 11.02% Y/Y (16.57% May, 14.29% Apr). The press release confirms the slowdown in headline CPI is "explained by the sharp deceleration in energy prices".
- Manufactured products CPI was revised -0.21ppt to -1.11% Y/Y (-0.63% May, -0.61% Apr).
- Food CPI was revised -0.04ppt to 0.87% Y/Y (1.10% May, 1.24% Apr). This looks primarily driven by fresh food (revised -0.09ppt), while "other food products" was revised -0.03ppt.
- Services on the other hand saw a 0.1ppt upward revision to 1.93% Y/Y (2.10% May, 1.85% Apr). A notable part of the deceleration from May is attributable to a slowdown in air transport prices, which slowed to 0.8% Y/Y from 6.8% in May.
- HICP special aggregates will become available with the Eurostat release due Fri 17 Jul.
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STIR: Energy Price Swings Remain Key For BoE, Just Under 60bp Of Hikes Priced
GBP STIRs are close to unchanged. Core global FI markets draw support from a modest downtick in energy prices.
- SONIA futures within 1.0 of yesterday’s settlement levels.
- BoE-dated OIS is little changed to 2bp less hawkish, showing 50/50 odds of a hike through July, 26bp of tightening through September, 46.5bp through year-end and 57bp through April.
- Recent hawkish extremes (~85bp of hikes through April on a multi-week horizon and ~105bp through year-end back in March) remain some way off, with ongoing elevated correlation to energy price swings noted and crude comfortably back from it’s multi-month highs given the reduction in missile fire between the U.S. & Iran.
- Most of the BoE’s MPC remain in wait-and-see mode when it comes to judging the degree of inflation passthrough stemming from the situation in the Middle East.
- Little of note on the UK calendar today, which will leave focus on spillover from energy price swings and the U.S. CPI release.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA (bp) |
Jun-26 | 3.753 | +2.3 |
Jul-26 | 3.855 | +12.5 |
Sep-26 | 3.990 | +26.0 |
Nov-26 | 4.115 | +38.5 |
Dec-26 | 4.195 | +46.5 |
Feb-27 | 4.246 | +51.6 |
Mar-27 | 4.278 | +54.8 |
Apr-27 | 4.301 | +57.1 |
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