ECB President Ladarde said services inflation requires particular understanding and monitoring. She highlighted that in the latest inflation data for July, services inflation rose to 4.4% from 4.2% while most other components of inflation slowed. She said the ECB considers inflation from three angles: wages, profits and productivity. She said services were particularly sensitive to wage increases. Lagarde said the ECB's base case is that services inflation wilt moderate over the course of 2025 as wage growth slows, what wage gains there are get absorbed by companies and as productivity improves. However, for the next six months, late 2024 and into 2025, then wage and services inflation is likely to pick up. - UBS Strategy
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