US consumer confidence hits six-month low, eurozone inflation at decade high – as it happened

Rolling coverage of the latest economic and financial news

• Latest: US consumer confidence at six-month low
• UK consumers curb credit... and repay mortgage debt
• Eurozone CPI jumped to 3% in August - meaning sweaty palms' at ECB
• Canada's economy shrank unexpectedly in Q2...
• ... but US house price boom continues
• Aluminium price hits 10-year high amid high demand, supply worries

Earlier:

• China manufacturing hit by slowing orders, and higher commodity prices
• Recovery in global trade hit by Covid outbreaks in east Asia

This month's dramatic move" higher in eurozone inflation to a decade high of 3% probably won't spur the European Central Bank into changing its monetary policy stance, argues Bert Colijn of ING.

He says today's data will cause some sweaty palms" at the ECB, but doesn't show much evidence of structural high inflation:

The change in last year's sales period and German VAT increase were the main drivers behind the jump in non-energy industrial goods prices from 0.7 to 2.7%. These effects are temporary and the increase in services inflation was much smaller, from 0.9 to 1.1%. Yes, price pressures are increasing, but August's dramatic move does overstate the underlying inflation developments.

Headline inflation at 3% has not been seen since 2011. The elevated headline rate was due to the higher core rate and continued year-on-year growth in food as well as energy prices. The latter has been somewhat of a surprise in recent months, related to higher gas prices and continued growth in petrol prices despite Brent oil prices starting to level off. This has the potential to push headline inflation higher towards year end.

The one big question mark is around the passthrough of the higher input and transport prices for goods, which has been moderate so far but the price pressures have become abnormal in recent months. The other is whether service sector reopenings will still cause price jumps like we saw for hairdressers after the first wave.

We're starting to see some evidence of that in restaurants and hotels, but not yet in package holidays. There is some evidence that this effect will start to become more prominent towards the end of the year, so hold tight: inflation has the potential to go higher from here.