Euro Area July Inflation Preview

Research evidence excerpt

Euro Area July Inflation Preview

Goldman Sachs

11.2%mom nsa, and accommodation services at around 1%mom nsa. We see

garments and footwear declining on the month, broadly in line with last year. Of the

non-core components, we expect energy inflation to increase to 7.6%yoy from

2.7%yoy in June, driven by notably higher pressures in fuel prices, as the

transportation fuels rebate introduced on May 1 expired. We look for processed

food inflation to tick down to -0.1%yoy and unprocessed food inflation to decline to

2.5%yoy.

n We expect French headline inflation to tick up to 2.1%yoy in July from 2.0%yoy in

June, and core inflation to move up 0.1pp to 1.3%yoy, reflecting an increase in both

core goods and services inflation on a year-over-year basis. We expect an

11.8%mom nsa increase in accommodation services, with the seasonality resembling

2025, a 27.7%mom nsa increase in airfares, after somewhat weaker than expected

June, and a 13%mom nsa increase for package holidays, also roughly following the

usual July seasonality of the past several years. Outside of core, we look for energy

inflation to tick down to 10.9%yoy from 11.0% in June, with downward pressure

coming from further easing in fuel prices broadly offset by a 7.4% increase in

regulated gas prices. We look for processed food inflation to decline to -0.2%yoy

and unprocessed food inflation to decline to 3.3%.

n We expect Italian headline inflation to decline to a strong 2.8%yoy in July from

3.0%yoy in June, and core inflation to move sideways at 1.7%yoy, reflecting marginal

increases in core goods and core services inflation on a year-on-year basis. We see

accommodation services printing at 0.8%mom nsa, package holidays coming in

slightly below 10%mom nsa, and airfares at 11%mom nsa after June saw a strikingly