EUR inflation watch: 7 charts on EUR inflation ahead of the June CPI report
Harmonized EUR inflation surprised markedly on the downside in May with a close to 0% MoM change as transportation services pulled down markedly (among other things due to subsidies).
We see risks tilted to the downside (again) this month as consensus expects an increase of 0.3-0.4% on the month, which would admittedly look reasonable if we deduct the trend in the transport category.
This month we see the major downside in surprise in headline inflation stemming from the food category. Vacation-related prices may surprise on the upside (hotel, restaurants etc) making the risk/reward on the downside less clear than in May.
Below you’ll find a set of charts that we find interesting for the EUR inflation outlook accompanied by only a few words.
Chart 1: HICP decomposed in May