ECB Inflation data September 2024 Monetary Policy meeting

Inflation remains a primary concern for the ECB. According to Eurostat’s flash estimate, annual inflation dropped to 2.2% in August, from 2.6% in July, 2024. While recent inflation data aligned with expectations, the ECB's projections still foresee headline inflation averaging 2.5% in 2024, 2.2% in 2025, and reaching the ECB’s target of 1.9% in 2026. The ECB also highlighted the expected increase in inflation towards the end of 2024, due to the fading impact of sharp falls in energy prices​.

Core inflation, which strips out volatile components such as energy and food, has been revised slightly higher for 2024 and 2025, primarily due to persistent inflation in services. However, the ECB staff remains optimistic about a rapid decline in core inflation, which is projected to decrease from 2.9% in 2024 to 2.0% by 2026​.

Although wage growth and high domestic inflation are driving some price pressures, labour cost pressures are moderating, and the ECB expects that profits will continue to absorb some of the impact of wage increases​.