Eurozone HICP Preview: Forecasts from six major banks, inflation has not yet peaked

Eurostat will release Harmonised Index of Consumer Prices (HICP) data for August on Wednesday, August 31 at 09:00 GMT and as we get closer to the release time, here are the expectations forecast by the economists and researchers of six major banks regarding the upcoming EU inflation print.

For August, the headline annualized HICP is seen a tad higher at 9.0%, with the core figure also likely to see a slight advance to 4.1%. On a monthly basis, the HICP in the old continent is expected to rise to 1.1% vs. 0.1% booked in July while the core HICP is foreseen at 0.4% against the previous figure of -0.2%. 

Commerzbank

“In July, the inflation rate in the euro area reached 8.9%, the highest level since the start of the monetary union. For August, there are signs of a slight decline to 8.8% thanks to the drop in prices for gasoline and heating oil. However, this does not mean that the high point of inflation is behind us. The underlying upward trend in prices is likely to have intensified again in August. The core inflation rate – i.e. the year-on-year rate of change in the consumer price index excluding the volatile prices for energy, food, alcohol and tobacco – is likely to have risen from 4.0% to 4.3%. And the rate of food inflation is also likely to have risen significantly to more than 10%. Already in September, the inflation rate could mark a new all-time high. The expiry of the 9-euro ticket for public transport and the gasoline discount in Germany at the end of August alone will push the rate up by more than 0.3 percentage points. Gas prices are then likely to take another leap upward in October when many utilities in Germany levy the gas surcharge for the first time. This could push the inflation rate in the eurozone above 10%.”

Danske Bank

“We look for a marginal slowdown in core inflation to 3.9%, but a further increase in headline inflation to 9.2% on the back of higher energy prices. In contrast to the US, we have not seen the inflation peak in the euro area yet and we look for further increases to double-digit rates in Q4, leaving the pressure on for more ECB hikes.”

TDS

“While declining fuel prices will weigh on inflation across the euro area, we still look for another acceleration in German HICP, mostly due to another strong increase in gas and electricity prices. However, we think the pullback in fuel will be enough to leave aggregate euro area inflation unchanged at 8.9% YoY, despite core strengthening to 4.2% YoY).”

SocGen

“We expect the August readings to show a pick-up in HICP of 10 bps to 9.0% YoY, despite the fall in gasoline prices and in core inflation of 30 bps to 4.3% YoY. Overall, we think stronger food and core inflation could push inflation to a cyclical peak of 9.7% in September. We think HICP will average 8.2% this year and 6.1% next year, while we see core inflation averaging 3.9% in 2022 and 4.4% in 2023.”

Citibank

“We expect headline HICP to print at 9.0% YoY, up from 8.9% in July, and core HICP at 4.2% YoY. This would imply a MoM seasonally-adjusted print for core of 0.6% MoM, replicating the July strong print.”

Deutsche Bank

“We see YoY CPI ticking down from the record +8.9% in July to +8.8% in August. However, we haven’t reached the peak yet, as they see CPI rebounding again in September up to +9.3%, so the ECB would still have a long way to go to get back to its target. On the question of core inflation, we see that moving up to +4.3% in August YoY, which would be the highest since the formation of the single currency.”