Inflation in the euro area


Data from June 2018 – extracted on 29 June 2018.

Next planned article update: 18 July 2018.

Highlights

Euro area annual inflation is expected to be 2.0 % in June 2018, up from 1.9 % in May 2018.

Figure 1: Euro area annual inflation and its main components (%), January 2008 - June 2018 (estimated)
Source: Eurostat (prc_hicp_manr)

The data in this article show the most recent annual rates of change for the euro area headline inflation and its main components issued by Eurostat. The figures presented are early estimates of euro area inflation.


Full article

Euro area annual inflation rate and its main components

Euro area annual inflation was 2.0 % in June 2018, up from 1.9 % in May 2018.

Looking at the main components of euro area inflation, energy is expected to have the highest annual rate in June (8.0 %, compared with 6.1 % in May), followed by food, alcohol & tobacco (2.8 %, compared with 2.5 % in May), services (1.3 %, compared with 1.6 % in May), and non-energy industrial goods (0.4 %, compared with 0.3 % in May).

Table 1: Euro area annual inflation and its main components (%), 2018, June 2017 and January-June 2018 (estimated)
Source: Eurostat (prc_hicp_manr)


Figure 1: Euro area annual inflation and its main components (%), January 2008 - June 2018 (estimated)
Source: Eurostat (prc_hicp_manr)


Figure 2: Euro area annual inflation and its main components (%), July 2016 - June 2018 (estimated)
Source: Eurostat (prc_hicp_manr)

Flash estimate and full HICP data

The euro area inflation flash estimate is issued at the end of each reference month or shortly after. When the complete set of harmonised indices of consumer prices (HICP) is released around the middle of each month following the reference month, estimated data are replaced by actual data derived from the Member States figures. Further information on the accuracy of the flash estimates can be found in the article 'Inflation – methodology of the euro area flash estimate'.

Main components of inflation

Each of the main components contributes in varying degree to the headline inflation in the euro area. In terms of weights for 2018, set at 1000 for the all-items HICP, services the largest component, accounting for around 44.4 % of individual consumption expenditure in the euro area. It is followed by non-energy industrial goods with around 26.3 %.

Food, alcohol & tobacco and energy account for 19.6 % and 9.7 %, respectively. Together, they comprise less than one third of euro area expenditure, but they can have significant impacts on the headline inflation as their levels tend to fluctuate significantly more than the other components.

The weights of the main components for of the euro area for 2018 are presented in Figure 3. Table 2 shows their relative weights for 2018.

Figure 3: Weights of the main components of the euro area HICP (2018)
Source: Eurostat (prc_hicp_inw)


Table 2: Relative weights of the HICP main components (%) (2018)
Source: Eurostat (prc_hicp_inw)

The breakdown of the HICP into four main components does not follow the standard COICOP classification, but groups items from different expenditure classes into four broad product categories. For further details on the composition/sub-indices, please see Eurostat's COICOP/HICP classification.

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