Median expectations for price growth over the next 12 months in the Euro Area increased to 3% in August 2026 from 2.9%. Expectations for inflation three years ahead also increased, to 2.9% from 2.7%, while the five-year outlook went up to 2.5% from 2.4%. Uncertainty about expectations for inflation over the next 12 months decreased, but remained higher than the level prevailing before the start of the conflict in the Middle East. Lower-income households continued to perceive and anticipate higher inflation than higher-income groups, while younger consumers maintained more moderate expectations than older respondents. Also, expectations for nominal income growth were unchanged at 1%. Those for economic growth remained at -1.2% while expectations for the unemployment rate 12 months ahead decreased to 11% from 11.2%. In addition, consumers expected the price of their home to increase by 3.4% over the next 12 months and mortgage interest rates to increase 4.9%, the same as in July.

European stocks were slightly lower on Friday, with both the STOXX 50 and the STOXX 600 falling 0.1%, pausing after gains in the previous two sessions, as traders ended a week packed with monetary policy decisions on a cautious note. The Bank of Japan raised interest rates to a 31-year high, as expected. However, two policymakers dissented and voted to keep rates unchanged, raising concerns among investors about whether the central bank will be able to sustain its tightening cycle. Meanwhile, oil prices extended their decline. Telecom, energy, insurance and auto shares were in the red, while technology stocks outperformed. Shell fell 1.2%, Nestle declined 1%, and Allianz lost 1.3%. Orange tumbled nearly 4%, making it the worst performer on the STOXX 600. On the other hand, ASML Holding gained 2.1% and STMicroelectronics rose 2.2%, ranking among the index's top performers. On the week, the STOXX 50 is little changed while the STOXX 600 is up 0.5%.

UK retail sales volumes rose 0.5% month-on-month in August 2026, defying market expectations of a 0.2% fall and rebounding from a 0.5% decline in July. Non-store retailers rose 1.7%, partially recovering from July’s decline when earlier promotional activity in June pulled sales forward. Non-food store sales volumes rose 0.6%, with department stores recovering from stock availability issues and clothing retailers rebounding. Food store sales volumes also increased 0.3%, supported by higher supermarket spending. Meanwhile, fuel sales fell 1.3% as sharp price rises prompted consumers to change buying habits, including partially filling tanks. Over the three months, sales volumes grew 0.9%, supported by warm weather, strong non-store and food sales, and higher alcohol and beverage sales linked to promotions and the World Cup. Annually, retail sales volumes rose 2.4%, exceeding expectations for a 1.9% increase and accelerating from a 1.2% gain in July.

Germany’s producer prices advanced 4.6% year-on-year in August 2026, marking the fifth straight month of producer price growth and accelerating from July’s reading of 3.0% while surpassing market forecasts of 4.1%. It was the fastest increase in producer prices since April 2023, mainly boosted by rises in energy prices (8.3% vs 3.8% in July), driven by higher prices for mineral oil, naphtha, heating oil, and motor fuels. Meanwhile, prices for intermediate goods accelerated to 6.1% from 5.4% in July, due to surges in prices for metals, precious metals, copper, and semi-finished copper. Capital goods were up 2.4%, reflecting higher prices for machinery and motor vehicles, while durable consumer goods climbed 2.1%. Conversely, non-durable consumer goods fell 2.0%. Excluding energy, producer prices rose 3.1%. Monthly, prices rose 1.1%, the same pace as in July and still the fastest pace in three months, exceeding market estimates for a milder 0.4% increase.

Japan's annual inflation rate held at 1.9% in August 2026, unchanged from the previous month and remaining at its highest level since December 2025. Prices continued to rise across food (3.1% vs 3.5% in July), transport (2.3% vs 2.6%), housing (1.0% vs 1.0%), household goods (4.9% vs 3.7%), clothing (1.5% vs 1.2%), healthcare (3.0% vs 2.1%), recreation (2.2% vs 1.9%), and miscellaneous items (0.7% vs 0.4%). Meanwhile, gas prices accelerated (2.0% vs 1.8%), while electricity prices fell at a steeper pace (-2.4% vs -0.1%) amid government energy subsidies. At the same time, education remained in deflation since early 2024 (-3.8% vs -3.8%). Core inflation, which excludes fresh food, eased to 1.7% from 1.8% in July, marking the first slowdown in four months while staying below the Bank of Japan's 2% target for a seventh consecutive month. On a monthly basis, consumer prices edged up 0.1%, much slower than an upwardly revised 0.5% increase in July.

Brent crude fell to around $102 per barrel on Friday, extending its decline for a third consecutive session as concerns over supply disruptions in the Middle East eased and hopes grew for renewed diplomatic efforts to end the conflict and restore energy flows. Saudi Arabia is targeting the recovery of around half the capacity of its East-West pipeline within days, with a return to full operations expected within six weeks. In the meantime, the kingdom is rerouting some crude exports through the Strait of Hormuz. Shuttle vessels transport crude through Hormuz before loading tankers waiting outside the strait, limiting their exposure to potential Iranian attacks. Reports also suggested that China had urged Iran to help curb Houthi militants after an appeal from Riyadh, as the rebel group intensified attacks on Saudi energy infrastructure. Meanwhile, President Donald Trump said he was weighing whether to resume attacks on Iran ahead of a meeting with Gulf leaders in New York next week.