Euro area inflation: Euro-area September inflation is likely to exceed JPMorgan's prior forecast

Overview

This macro update assesses early September inflation releases from major euro-area economies. JPMorgan concludes that the aggregate euro-area inflation print is likely to be firmer than previously forecast, led by energy, food and selected services components.

Core views

JPMorgan's assessment of the September euro-area inflation release became more inflationary after data from German states and France, following the prior day's Spanish release. Headline HICP inflation surprised relative to the institution's forecasts by 0.3 percentage points in Spain and 0.5 percentage points in France. German CPI was also expected to surprise by roughly 0.1-0.2 percentage points. On this basis, JPMorgan now sees euro-area headline HICP inflation rising from 3.2% year over year in August to 3.9% in September, rather than its prior 3.6% forecast. Italian data and the German national release remained pending at the time of the note. The evidence for a core-inflation upside surprise was less conclusive because national information was mainly CPI-based and broadly aligned with JPMorgan's expectations. Nevertheless, the institution judged there was a risk that euro-area core inflation would print at 2.5% year over year in September rather than 2.4%; its prior forecast was already close enough to 2.5% that rounding mattered. The national releases pointed to four broad inflation drivers. Energy inflation surprised on the upside in all countries reported so far. Food inflation also exceeded expectations, though more modestly, as unprocessed-food inflation accelerated while processed-food inflation appeared steadier. Within core inflation, pressure in core goods persisted and was likely still linked to technology goods. The report also identified signs of a renewed increase in services inflation, potentially reflecting indirect effects from the energy shock: package holidays picked up across countries, while transport and accommodation inflation may also have risen. France provided the clearest example of the upside. September headline HICP rose 0.7 percentage points to 3.4% year over year, while headline CPI rose 0.6 percentage points to 3.0%. Both measures were 0.2 percentage points firmer than consensus and 0.4-0.5 percentage points above JPMorgan's expectations. Energy inflation increased 4.4 percentage points to 21.2% year over year, a 1.8-percentage-point upside surprise, while food inflation increased 0.4 percentage points to 1.5%, a 0.3-percentage-point surprise. Core inflation was in line with JPMorgan's 1.4% expectation but still rose 0.2 percentage points from the prior month. Core goods inflation rose 0.1 percentage points to -0.3%, slightly softer than expected, but this was offset by services inflation rising 0.3 percentage points to 2.2%. JPMorgan linked the latter to a less pronounced end-of-summer seasonal decline in transport and accommodation prices than in 2025. In Germany, headline CPI inflation increased by about 0.4 percentage points in most states. Core CPI was stable in several states and fell 0.3 percentage points in Bavaria, which JPMorgan attributed to normalization in education-price inflation. However, national package-holiday inflation rose 0.6 percentage points to 3.8% year over year, providing an offset to the softer core signal.

Analysis framework

JPMorgan combines early national CPI and HICP releases from major euro-area countries with its prior forecasts, then aggregates the country-level surprises into an estimate for the euro-area headline and core inflation prints. It also decomposes inflation into energy, food, core goods and services to identify the sources of the forecast revision.

Methodology notes

• Industry AnalysisVolume-price decomposition

  Inflation-component decomposition

  The report separates headline and core inflation into energy, food, core goods and services to show which components caused the aggregate inflation surprise.

Key data

• Euro-area headline HICP inflation forecast3.9%oyaJPMorgan's September estimate, up from 3.2%oya in August and above its prior 3.6%oya forecast.
• Euro-area core inflation risk case2.5%oyaPotential September print versus JPMorgan's 2.4%oya forecast.
• Spain headline HICP surprise0.3%-ptAbove JPMorgan's forecast.
• France headline HICP surprise0.5%-ptAbove JPMorgan's forecast.
• France September headline HICP3.4%oyaUp 0.7%-pt from the prior month and 0.2%-pt above consensus.
• France energy inflation21.2%oyaUp 4.4%-pt, representing a 1.8%-pt upside surprise versus JPMorgan's expectation.
• France services inflation2.2%oyaUp 0.3%-pt, stronger than expected.
• Germany package-holiday inflation3.8%oyaUp 0.6%-pt nationally.

Impact & implications

The early country data lead JPMorgan to expect a stronger euro-area headline inflation outcome than previously anticipated, with energy the broadest source of upside pressure and services providing additional support. The report also flags a modest risk that core inflation rounds up to 2.5% year over year.

Risks

• Core-inflation evidence remained limited because it was based mainly on national CPI releases rather than complete euro-area information.
• The final euro-area outcome remained subject to the pending Italian and German national inflation releases.

What to watch

• Italian inflation data later in the morning.
• Germany's national inflation release in the afternoon.
• Whether euro-area core inflation prints at 2.5% year over year rather than JPMorgan's 2.4% forecast.
• Further movement in energy, unprocessed-food, package-holiday, transport and accommodation inflation.