Falling manufacturing inflation and stable inflation in services in the euro zone: Which inflation indicator should we follow?

For several months now, manufacturing inflation has been falling in the euro zone, while inflation in services has been stable at around 4%. The fall in manufacturing inflation can be explained by lower energy and industrial commodity prices, as well as by weak industrial production. The important question is this: will the fall in manufacturing inflation lead to a fall in wages, service prices and headline inflation, or will the rigidity of service price rises and the stabilisation of energy and commodity prices lift manufacturing inflation? A look at past inflation trends shows that it is the rise in service prices that determines headline inflation in the medium term, with headline inflation remaining significantly higher than the rise in manufactured goods prices.