Euro area: July inflation review

According to Eurostat final release, the Euro area annual headline inflation stabilized at 2.04% in July (vs. flash 2.02%) and core inflation, which excludes energy and food, alcohol and tobacco prices, at 2.31% (vs. flash 2.29%). The contribution of Services to annual headline inflation continues to be the most important, with a moderate deceleration to 1.44pp (1.51pp in June). The contribution of Food, Alcohol and Tobacco went slightly up to 0.63pp (0.59pp in June). The contribution of the Energy inflation was again negative and barely unchanged compared to the previous month, at -0.22pp (-0.25pp in June). Non-Energy Industrial Goods (NEIG) contribution increased to 0.19pp (0.13pp in June). Should the price level of headline HICP remain at its July level until end-December 2025, headline inflation would average 2.02%yoy over 2025 and stand at 1,61%yoy in December.