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Eurostat will release crucial European inflation data on Tuesday. Headline inflation is expected to recede in June. Uncertainty prevails regarding future rate cuts by the ECB. The Harmonized Index of Consumer Prices (HICP), a key indicator of inflation in the broader euro bloc, is scheduled for release on Tuesday, July 2. The European Central Bank (ECB) will closely scrutinize this data amid persistent uncertainty about the continuation of its easing cycle that started at the June 6 event. Since December 2023, the Consumer Price Index (CPI) in the euro area has gradually declined, with the exception of the May 2024 hiccup. At the latest ECB meeting, where the central bank trimmed its policy rate by 25 bps for the first time since 2019, the bank revised its economic growth and inflation forecasts upward, predicting that price growth will return to its 2% target later than previously expected. On this, inflation is now projected to be 2.2% next year, exceeding the earlier forecast of 2.0%, and is anticipated to reach the target only by 2026. This suggests that achieving the “last mile” to the target may be more challenging than initially hoped. At that gathering, ECB President Christine Lagarde acknowledged progress in the bank’s fight against high inflation, but she also indicated that the battle is not yet over, as inflation is expected to remain elevated until next year. What can we expect in the next European inflation report? Reflecting similar inflation trends in other G10 countries, economists generally predict that headline HICP inflation will decrease a tad to 2.5% over the last twelve months to June, down from the 2.6% rate in May. The core measure, which strips food and energy costs, is expected to rise by 2.8% compared to the previous year, following a 2.9% increase in the prior…

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Filed under: News - @ July 1, 2024 9:24 pm