Unexpected rise in Eurozone inflation

Eurozone inflation unexpectedly rose in July, according to a first estimate from Eurostat. The rise is bad news for the European Central Bank (ECB), which may be more reluctant to cut interest rates again.

Eurozone inflation stood at 2.6 per cent in July, up from 2.5 per cent in June, the European statistics office reported. Inflation was also higher than analysts had expected. 

In the Netherlands, France and Germany, consumer goods prices again rose at a slightly faster rate. Belgium saw a slight slowdown in July, but inflation remains relatively high.

At an average of 2.6 percent, inflation is still far from the ECB's 2 per cent target. Core inflation, which strips out volatile prices such as energy, remained at 2.9 per cent in July for the third month in a row.

The ECB will hold its next meeting on 11 and 12 September. Economists expect the central bank to announce a second rate cut, but this is not yet certain. Economic growth rates, which are uneven across the Eurozone, will also play a role in the decision.

 

© AFP PHOTO / DANIEL ROLAND

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