Euro Area Final Inflation Details Show Easing Underlying Momentum but Energy Pressures Push Headline Higher

Economics Research 17 September 2026 | 3:25PM BST

Euro Area: Final Inflation Details Show Easing Underlying Momentum but Energy Pressures Push Headline Higher

BOTTOM LINE: The final release of Euro area inflation for August showed headline Katya Vashkinskaya | inflation at 3.25%yoy, revised down from the flash reading of 3.26%yoy, and core Goldman Sachs International inflation at 2.40%yoy, down 1bp from the flash print. Our summary indicator of sequential underlying inflation declined by another 1bp in August but still stands at a relatively elevated rate of 0.22%mom. The change in our sequential summary measure reflects a sequential decline across most of the metrics we track, with the biggest moves recorded in the persistence-weighted (+0.10pp), supercore (-0.07pp), and HICPXX (-0.06pp) measures. Updating our medium-term inflation infrastructure with the final details and another month of the underlying summary measure, our medium-term path continues to show core inflation at a strong 2.4%yoy in 2026, peaking at 2.7%yoy in 2027Q1 before gradually declining to 2.0%yoy in 2028Q4. As for headline inflation, incorporating the final details for the fuels components and the two weeks of higher-frequency pump price data for September, we now see the peak at 3.8%yoy in 2026Q4 (up from 3.6%yoy previously), as we upgrade the energy component by 2pp to 18%yoy for Q4.

Euro Area Core HICP (Aug, Final): 2.40% vs. Flash 2.41%, last 2.48%, all %yoy.

Euro Area Headline HICP (Aug, Final): 3.25% vs. Flash 3.26%, last 2.94%, all %yoy.

1. The final release of Euro area inflation for August showed headline inflation at 3.25%yoy, revised down from the flash reading of 3.26%yoy, and core inflation at 2.40%yoy, down 1bp from the flash print. Energy inflation stayed at 14.3%yoy, and Food, Alcohol and Tobacco (FAT) inflation was revised down to 1.13%yoy. Using our seasonal adjustment methodology, aimed at closely replicating the ECB’s, and removing the Easter adjustment for the whole services basket, we estimate that seasonally adjusted sequential core inflation was 0.15%mom in August, down from 0.26%mom in the July reading, slightly below the ECB’s estimate of 0.18%mom. Within core inflation, we estimate that seasonally adjusted sequential core goods inflation went down to 0.19%mom in August and sequential services inflation declined to 0.12%mom. The main positive contributions to the seasonally adjusted sequential pace in August came from catering, garments and rent, while accommodation services and transportation by rail and air provided a negative offset.

2. The services inflation contribution to headline inflation went up to 1.43pp in August. This could be attributed, in part, to hospitality-related services (restaurants

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and accommodation), miscellaneous services, insurance and financial services, and health and leisure services (recreational services) still contributing more than their historical averages (Exhibit 1). The contribution from NEIG went up to 0.30pp in August. The contribution of FAT declined further to 0.22pp, its lowest value since June 2021, while the Energy contribution increased to 1.29pp, its highest reading in more than 3 years. An increase in the contribution from the fuels component (0.94pp in August from 0.67pp in July) saw the transport contribution to headline inflation increasing to a new recent high of 1.19pp in August.

3. After trending up for some time, our summary indicator of sequential underlying inflation declined by another 1bp in August but still stands at a relatively elevated rate of 0.22%mom. The change in our sequential summary measure reflects a sequential decline across most of the metrics we track, including supercore, HICPXX, domestic, 25% trimmed mean, weighted median and our proxy for the ECB’s PCCI measures, somewhat offset by increases in wage-sensitive and persistence-weighted measures (Exhibit 2). The biggest moves were recorded in the persistence-weighted (+0.10pp), supercore (-0.07pp), and HICPXX (-0.06pp)…