MNI Eurozone Inflation Insight: High NEIG Warrants Focus

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Executive Summary

• Eurozone July flash headline was roughly in line with initial consensus at 2.92% Y/Y (2.9% cons) but may represent a marginal downward surprise following earlier national-level data which, on balance, suggested moderate upside risks (MNI tracking was for 3.0%). This means that headline moves closer to its recent highs seen in May (3.17%), after which June saw a drop to 2.75%.
• Energy has been the main directional driver for headline over at least the past year, with core inflation overall still little changed when abstracting from some monthly volatility.
• The core measure meanwhile came in a little above consensus at 2.48% Y/Y (2.4% cons) and June's 2.36% print as non-energy industrial goods accelerated more than expected.
• However, non-energy industrial goods printed 0.94% Y/Y, above the MNI median for the aggregate which was for 0.8% (also printing above the highest respective estimate we had seen). Final details may reveal to what extent the acceleration warrants ECB caution, with the Bank remaining focused on indirect and second-round effects from higher energy prices.