Eurozone inflation rises to 2.6 percent in July exceeding expectations

In June, inflation was 2.5 percent, easing slightly from the 2.6 percent of May. Core inflation, which excludes more volatile energy, food, alcohol, and tobacco prices, hit 2.9 percent in July, versus a Reuters estimate of 2.8 percent. The figure compared with a core print of 2.9 percent in June.

The widely watched services inflation print came in at 4 percent for July, down from the 4.1 percent of June.

Harmonized inflation increased in several key eurozone countries, including in leading economies Germany and France. In both countries, inflation had been at 2.5 percent in June and picked up to 2.6 percent in July.

The inflation rates come just a day after the release of the zone’s second-quarter gross domestic product, which the European Union’s statistics office said grew 0.3 percent in the three months to the end of June.

Investors will now weigh how the fresh data will impact the European Central Bank’s trajectory for potential future interest rate cuts. The ECB held rates steady when it met earlier this month after reducing them in June. At the time, it left open the option for another cut in September.

The ECB Governing Council said it would continue to consider the dynamics and outlook of inflation and the strength of monetary policy transmission in its decision-making. It stressed that was “not pre-committing to a particular rate path.”
 

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