Euro area June flash HICP: Inflation at the 2% target, with stable core inflation

Euro area headline flash inflation slightly increased to 2.0% Y/Y in June, up from 1.9% in May. Core inflation remained stable at 2.3% . Services inflation slightly picked up to 3. 3 % Y/Y from 3.2% in May while non-energy industrial goods inflation decreased to +0. 5 % after +0.6% over the last four month s. E nergy inflation softened to -2.7% after -3.6% in May while food prices continue to grow at a rate slightly above 3%. We expect headline inflation to remain close or below 2% by the end of the year and to reach 2.0% on average in 2025. ► Germany : June HICP came in at 2.0% (Natixis forecast at 2.1%), after 2.1% recorded in May. According to national indices, this decline can be attributed to a slight reduction in both goods and services, with each component down by 0.1 pp. Additionally, core inflation has also shown a slight slowdown, coming in at 2.7% after 2.8% in May. We expect inflation to increase slightly in July at 2.1% Y/Y and averaging 2.2% in 2025. ► France : June HICP I nflation reached +0.8% YoY, up from +0.6% YoY in May, coming in slightly above expectations , but remaining the lowest across Euro area countries . This increase in inflation is explained by the acceleration in the prices of services, particularly for accommodation, healthcare and transport, as well as a weaker decrease in energy prices. We expect inflation to remain broadly stable in July, at 0.8% Y/Y and averaging 1.0% in 2025 . ► Italy: The harmonized inflation for June remained stable at 1.7% for the second consecutive month. Among the main components, energy prices continued to decline, falling by 2.5% Y/Y (1.2% M/M ). The inflation rate for services also remained unchanged from May at 2.9%. Overall, Italian inflation is evolving in line with our expectations. Thus, we maintain our inflation forecast at 1.7% for 2025 and 2% for core inflation (excluding energy and food). ► Spain: According to preliminary estimates, inflation, as measured by the harmonized index of consumer prices (HICP), recorded an unexpected acceleration to +2.2% YoY in June (consensus: +2%; prior: +2%). According to INE, this acceleration was mainly due to fuel prices. The core consumer price index (CPI) reached +2.2% YoY for the second consecutive month. Under these circumstances, we have revised our inflation forecast for 2025 to 2.4% (up from 2.2% previously). We anticipate a pause at the next meeting on July 24th , as the ECB is 'well positioned' to evaluate the impacts of future tariffs and to assess whether disinflation remains on track in the coming months. We expect one final rate cut of 25 basis points in September, bringing the terminal rate to 1.75%