Euro Inflation Preview | Europe: Energy U-turn

Research evidence excerpt

Euro Inflation Preview | Europe: Energy U-turn

Idea

July 23, 2026 10:16 AM GMT

Morgan Stanley Europe S.E.MEuro Inflation Preview | Europe Jens Eisenschmidt

Chief Europe Economist

Energy U-turn Jens.Eisenschmidt@morganstanley.comJean-Francois Ouvrard +49 69-21662817

Deputy Chief European Economist

Jean-Francois.Ouvrard@morganstanley.com +49 69-21662813

We forecast headline HICP at 2.9%Y in July, up from June, with Claire A Thuerwaechter

core unchanged at 2.4%Y. The uptick comes from energy. The EconomistClaire.Thuerwaechter@morganstanley.com +49 69-21662842

pass-through to other items will, however, only come later. Our Morgan Stanley & Co. International plc

updated path with higher oil and natural gas prices sees headline Chiara Zangarelli

Economist

averaging 2.3%Y in 2027 (vs 1.9%Y previously). Chiara.Zangarelli@morganstanley.com +44 20 7677-3644

Energy and headline up: We forecast EA headline HICP inflation at 2.9%Y in July Morgan Stanley Europe S.E.

Gabriela Silova

(due on July 31st), up from June (2.8%Y). Energy inflation should pick up (10.1%Y

from 8.5%Y), on higher fuel and natural gas prices. For food, we continue to see no Gabriela.Silova@morganstanley.com +49 69-21662832

upside from higher energy prices and, in the near term, further disinflation in some Morgan Stanley & Co. International plc

items should dominate. We expect another step down in July (1.4%Y from 1.5%Y). Skander Garchi Casal

Core inflation also stable: We forecast stable core inflation at 2.4%Y. Similar to Skander.Garchi.Casal@morganstanley.com +44 20 7425-0034

food, we do not see signs of indirect or second-round impacts. For core goods, we

expect an uptick to 0.8%Y. Upward trends in IT-related items ("chipflation") and

some correction in French garment prices should provide upside.