€ inflation details – The core rate settles above the ECB target

The core rate settles above the ECB target

According to figures from Eurostat and the ECB, consumer prices in the euro area excluding energy, food, and beverages (core rate) rose by 0.27% in June compared with May, after seasonal adjustment. This means that the official core rate is above the average for the previous three months (Chart 1). In recent months, one-off effects related to the Easter holidays distorted the core rate, and the ECB's seasonal adjustment is likely to slightly overestimate the core rate this month as well. Adjusted for special effects, however, the core rate appears to be settling above the ECB's target in June.

The core rate has been moving sideways for a year

The ECB's seasonally adjusted figures for the core rate have fluctuated sharply on a month-on-month in recent months. This is mainly due to special effects related to the Easter holidays, which the ECB's seasonal adjustment did not adequately capture. If, instead, the previous month's core rate is adjusted using our preferred method (X-13 ARIMA model), the core rate has been moving sideways for about a year. According to our calculations, the core rate would be around 0.22% in June.

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