· The EMU HICP did slow from its m/m pace of last month but the headline is still moving higher. The 12-mo to 6-mo to 3-mo growth rates how that the speed of the rise is accelerating. German price trends are up-to-date and they show the same steady accelerating as for the EMU headline. Italy also with inflation updated for July shows the pace steady at just above 4% across theses same horizons.

· We have no details to look at yet in the HICP. But as of last month goods prices (oil and food) were carrying trends higher whiles services prices remained subdued. At a 2.2% over three months services sector inflation actually stepped down in the last three months compared to 6-mos and 12-mos. 

· Through June month Core inflation was relatively well behaved at 1.3% over three months for all of EMU but still an unruly 2.5% Yr/Yr. German core inflation through June reached only 1.8% Yr/Yr and shorter time spans show it has been decelerating. Italian and Spanish Core inflation rates are above 2% for 12 months but in each case inflation has fallen over shorter horizons. For Italy core 3-Mo inflation is running at a pace below 2%; for Spain it is a slightly excessive 2.2%. 

· The news that the ECB says it watches the most closely is the worst (headline inflation). But the core shows some progress even if its 12-mo growth rate remains something to give the ECB pause.

Trends in EMU HICP; Flash Index

% mo/mo

% saar

Jul-08

Jun-08

May-08

3-Mo

6-Mo

12-Mo

Yr Ago

EMU-13

0.2%

0.5%

0.6%

5.1%

4.0%

4.1%

1.8%

Core

#N/A

0.2%

0.2%

1.3%

2.3%

2.5%

1.9%

Goods

#N/A

0.4%

0.8%

7.6%

6.0%

4.9%

1.5%

Services

#N/A

0.3%

0.4%

2.2%

2.5%

2.5%

2.6%

HICP

Germany

0.3%

0.5%

0.6%

5.4%

3.2%

3.5%

2.0%

France

#N/A

0.5%

0.5%

4.5%

4.0%

4.0%

1.3%

Italy

0.0%

0.6%

0.4%

4.2%

4.4%

4.1%

1.7%

Spain

#N/A

0.6%

0.7%

4.9%

4.5%

5.0%

2.4%

Core excl Food Energy & Alcohol

Germany

#N/A

0.1%

0.3%

-0.4%

0.8%

1.8%

2.1%

France

#N/A

#N/A

0.1%

#N/A

#N/A

#N/A

1.4%

Italy

#N/A

0.4%

0.2%

1.9%

3.1%

3.0%

1.9%

Spain

#N/A

0.3%

0.3%

2.2%

2.6%

3.4%

2.5%

Blue shaded area data trail by one month