**As seen in Risk In The Week report 09/23/22, cablefxm.co.uk/reports
Eurozone inflation accelerated to a fresh record high in August, headline consumer prices jumped to 9.1% Y/y from 8.9%, this was faster than the consensus expectation for 9.0%. The core figure increased to 4.3% Y/y from 4.0%, the ex. Energy and goods metric ticked up to 5.7% from 5.3%. Food and alcohol prices showed the first double-digit rise in August at 10.6% Y/y, energy remains elevated at 38.6%, however, this is off the 42.0% Y/y seen in June. Services prices came in faster than previous at 3.8%, goods inflation accelerated to 5.1% Y/y. German consumer prices are set to be released ahead of the eurozone reading, this would give us some color heading into the release. The desk at ING says eurozone inflation will be higher, partly due to the German govt. decision to end cheap transportation prices as of August 31. Analysts at ABN AMRO note that historically, gas price changes have a moderate but long-lasting impact on eurozone inflation, they say gas prices could take a full year to feed into consumer prices. The desk sees inflation peaking until September-October and warn that the rise in prices is not over yet. ABN AMRO does not expect inflation to ease until next year, they see prices going back to the ECB’s target by end of 2023. Lastly, they now see the ECB policy rate reaching 2% by end of this year, they have revised their calls for a 75bps hike in October and a 50bps rise in December. Their previous forecast saw a peak rate of 1.5%.
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