By Stefan Kramer
FRANKFURT (MktNews) - The eurozone harmonized index of consumer prices (HICP) likely rose 0.2% on the month in June and 3.0% or 3.1% on the year, with 3.1% y/y the more probable outcome, according to Market News International calculations based on national data already released.
There is a remote chance that eurozone HICP -- due to be released by the Eurostat on Wednesday July 18 -- rose just 0.1% m/m, but due to rounding the year-on-year rate will still be 3.0% or 3.1%.
Either way, June data already available show that inflationary pressures have eased somewhat and that remarks by ECB officials, that eurozone HICP peaked at 3.4% y/y in May, were probably right.
But, unfavorable base effects are likely to stop a further decline of eurozone HICP to below 3.0% y/y in July and August.
The lower June outcome is likely to please the European Central Bank (ECB) and could help to bring about a rate cut at the end of August. ECB President Wim Duisenberg has all but ruled out a rate cut before the ECB's August summer recess.
Still, eurozone HICP has now been above the ECB's 2% price stability ceiling for more than a year and will stay above it for some time to come.
It remains to be seen how trade unions will react to an average eurozone HICP of above 2.5% in 2001, as now seems likely. The ECB has repeatedly voiced concerns about second round effects and left no doubt that it is determined to bring HICP back to below 2% in the medium term.
Nine of 12 eurozone countries -- including the five largest states -- accounting for 90% of the weighted average for HICP, have already reported their HICP data for June. In addition, Belgium has reported its national CPI.
These data suggest that HICP will rise between 0.1% and 0.2% m/m, with the actual result dependent on the outcome in the two remaining countries (Austria and Greece) and any rounding effect.
HICP data for the eight countries which have already released their June figures and Belgium CPI show the following rises versus May: Germany, +0.2%; France, +0.0%; Italy, +0.3%; Spain, +0.3%; the Netherlands, -0.35%, Finland, +0.1%, Ireland, +0.7% and Portugal +0.3%. Belgium reported preliminary national CPI rose 0.2% m/m.
Taken together, these figures imply an HICP rise of 0.154% m/m, if prices in the remaining two countries were flat, which is unlikely.
Only an average weighted decline of 0.1% in the two remaining countries would push eurozone HICP below 0.15% and therefore to 0.1% m/m.