When commenting on inflation, economists typically look at changes in prices over a year. That is helpful because it removes the large seasonal fluctuations that affect consumer prices. But it can also be misleading when inflation pressures are changing. The September release of the Harmonized Index of Consumer Prices (HICP) in the eurozone is a case in point.
For inflation to settle perfectly at the ECB’s 2% target for annual inflation, the monthly increase in prices would need to average 0.17% over twelve months. It is therefore interesting that the monthly inflation rate shows a change in the behaviour of price pressures since March (see Chart 1).