Inflationen er ganske vist på vej op i denne tid i Europa, men ABN Amro venter et skarpt fald i inflationen til næste år, måske til omkring 1 pct. – i kerneinflationen. Det skyldes bl.a., at beskæftigelsen ikke kommer tilbage på niveauet fra før pandemien, og det vil lægge en dæmper på lønforhandlingerne, så lønomkostningerne bliver lave næste år.
Euro core inflation set for jump, but should fall sharply next year
Euro Macro: Core inflation rate to jump higher in August – On Tuesday, the flash estimate for eurozone inflation in August will be published. The core inflation rate is expected to jump higher, to around 1.5%, up from 0.7% in July. Our forecast is in line with the consensus estimate.
The decline in eurozone core inflation in July happened despite a jump in Germany’s (core) inflation rate that month, due to an upward base effect of the temporary cut in the German VAT rate in July 2020. In short, base effects from events that happened a year ago, are currently playing a dominant role in the eurozone core inflation rate.
The large impact of the base effects in the individual countries also became evident the first member states’ August inflation rates that were published today. To begin with, HICP inflation in Germany rose to 3.4% in August, up from 3.1% in July. The details have not yet been published, but regional data suggest that the rise was due to a rise in core inflation (to around 2.0%, up from 1.8% in July) and a further upward impact from energy price inflation. Next, Spain reported a jump in HICP inflation to 3.3%, up from 2.9% in July.
Looking ahead, core inflation is expected to remain elevated at a level of around 1.5% throughout this year. Base effects could continue to result in quite some volatility, particularly in November-December as new lockdown measures resulted in shop closures in a lot of countries the year before.
As from January 2022 onwards, we expect eurozone core inflation to drop lower again, likely to levels below 1%. Importantly, the temporary factors mentioned above will drop out of the equation.
More fundamentally, underlying inflationary pressures remain subdued as a lot of slack has built up the eurozone economy, most notably in the labour market. Indeed, employment still was 2.6 million below pre-pandemic levels in 2021Q2, despite the wide use of temporary employment schemes. In Germany and France combined some 2 million people still were in temporary employment schemes at the start of this summer.
The large amount of slack in the labour market has also limited negotiated wage growth (the wage measure preferred by the ECB) since the start of the pandemic (see graph). We think that the downward impact on core inflation from economic slack will outweigh any upward impact from the recent rise in commodity and intermediate goods prices filtering through.
