Credit AgricoleEurozone inflation: August HICP preview and updateThe preliminary inflation data in August published so far –in Spain, Germany and Belgium –provided few surprises. All in all, YoY inflation continued to rise, in a broad-based way. In particular, food and core inflation are still increasing overall.Tomorrow, the inflation numbers for France, Italy and the overall Eurozone will be published. We expect Eurozone headline HICP at 9.1% YoY (+20bp from July) with core at 4.2-4.3% (+20bp as well). Our take is slightly above the Bloomberg median consensus(headline9.0%,core 4.1%). Incontrast,wehaveFrenchCPIat5.9%YoY,20bpbelow consensus. Core inflation at 4.2-4.3% –if our forecast is correct –would likely put a higher probability for a 75bp hike by the ECB (rather than 50bp) at next week’s monetary policy meeting.Beyond August, the main drivers for European inflation will remain the same in our view: (1) natural gas prices; (2) electricity prices; and (3)the degree of European governments’ intervention to cap energy prices. In this regard, multiple scenarios are possible. In particular, we currently assume that a structural reform of the European electricity market (so as to de-link electricity prices from natural gas) will take time. In turn, we expect that a myriad of measures taken at the country level (so as to take down energy prices for households) will continue to be implemented, in turn making inflation scenarios even more uncertain. In the near term, we expect further acceleration in core inflation by year-end, towards 4.5-4.7% YoY, before some easing materialises. That said, we still have core above 4% during the totality of H123. Bear in mind that wages will probably accelerate significantly in early2023,considering headline inflation above 10% in Q422.INGIndustrial production and retail sales improved in JulyIndustrial production rose unexpectedly by 1.0% month-on-month, seasonally-adjusted (vs -0.5% market consensus), following a 9.2% surge in June. Output forecasts for August and September also improved suggesting that solid production is likely to continue this quarter. By industry, automobile production and shipments improved. Keeping up with the production setbacks will normalise in a few months, but the solid gain for two consecutive months shows that the global supply bottleneck is fading and pent-up demand remains strong. Meanwhile, weak production of electronic components and devices suggests that global semiconductors are entering a downcycle for the second half of this year.Meanwhile, retail sales edged up 0.8% in July (vs -1.4% in June), which was also better than the market consensus of 0.3%. Household consumption remained strong despite the resurgence of Covid cases and high inflation. General merchandise and apparel fell, but more importantly, motor vehicles continued to rise firmly by 4.4% (vs 5.2% in June) for the second month in a row.