EUROZONE INFLATION STEADY IN JULY AT 2.0%
In a surprise development, Eurozone inflation remained stable in July, official data from the European Union’s statistics agency showed on Friday. Despite economists’ predictions of a slight easing, consumer prices in the single currency area held firm at 2.0% last month, staying in line with the European Central Bank’s (ECB) target of 2.0%.
This resilience was partially attributable to a slower decline in energy prices compared to June. While energy prices did drop by 2.5% in July, this was slightly higher than the 2.6% decline seen in the previous month. Notably, food and drink prices continued to rise, accelerating to 3.3% in July from 3.1% in June, while service price increases edged down to 3.1% from 3.3%.
Over the past year, Eurozone inflation has significantly decreased from its record high of 10.6% in October 2022, largely due to the ease in energy prices following the Russia-Ukraine conflict. With inflation now under control, the ECB has embarked on rate cuts aimed at bolstering the eurozone’s sluggish economic growth.
The central bank is widely anticipated to keep interest rates unchanged at its upcoming meeting, given that Eurozone inflation is currently in line with its 2.0% target. However, some economists suggest that this could shift based on the potential impact of US President Donald Trump’s tariffs on the European economy.
In a recently struck deal between Washington and Brussels, most EU goods entering the US will face 15% customs duties. This could potentially hamper the bloc’s economic growth, necessitating further scrutiny of how trade tensions may influence future inflation trends.
