According to Commerzbank’s Dr. Ralph Solveen, Eurozone inflation declined to 2.8% in June, primarily due to lower energy prices, while core inflation eased to 2.4% [1]. Despite this moderation, Commerzbank forecasts that overall inflation will remain close to 3% in the coming months, with the rate expected to stay near this level throughout the second half of the year [1].
The report highlights that although energy prices are likely to fall slightly, companies are anticipated to increasingly pass on their still-elevated energy costs to customers. These indirect effects, which the European Central Bank (ECB) has been concerned about, are expected to intensify in the near term [1].
In response to persistent price pressures, Commerzbank expects the ECB to implement another interest rate hike at its September meeting. The bank characterizes this potential rate hike as a counter-movement to the sharp increase in inflation observed in the previous month, rather than a sign of a sustained reduction in underlying price pressures [1].
No specific market reactions or analyst opinions beyond Commerzbank’s outlook are mentioned in the article [1].
CONCLUSION
Eurozone inflation has eased but remains elevated, prompting expectations of another ECB rate hike in September according to Commerzbank. The persistence of price pressures, especially from energy costs, suggests continued vigilance from the central bank.