Looking at the main components of euro area inflation, food, alcohol & tobacco had the highest annual rate in August (1.7 %, compared with 2.0 % in July), followed by services (0.7 %, compared with 0.9 % in July), non-energy industrial goods (-0.1 %, compared with 1.6 % in July), and energy (-7.8 %, compared with -8.4 % in July).

Euro area annual inflation was -0.2 % in August 2020, down from 0.4 % in July 2020.

Main components of inflation

Each of the main components contributes in varying degree to the headline inflation in the euro area. In terms of weights for 2020, 100 % for the headline HICP, services is the largest component, accounting for around 44.9 % of household final monetary consumption expenditure in the euro area. It is followed by non-energy industrial goods with around 26.2 %.

Food, alcohol & tobacco and energy account for 19.1 % and 9.8 %, respectively. Together, they comprise less than one third of euro area expenditure, but they can have significant impacts on the headline inflation as their prices tend to fluctuate significantly more than the other components.

The weights of the main components of the euro area for 2020 are presented in Figure 3. Table 2 shows their relative weights for 2020.



Source: Eurostat Figure 3: Weights of the main components of the euro area HICP - 2020Source: Eurostat (prc_hicp_inw)



