The Eurozone’s inflation rate climbed to 2.6 percent in July, marking a slight increase from the previous month’s 2.5 percent. This rise, which matched preliminary estimates from Eurostat and exceeded initial economist projections of 2.4 percent, has dampened expectations for quick interest rate cuts by the European Central Bank (ECB).
The euro has strengthened against the U.S. dollar, reaching its highest level since late December 2023, fueled by the inflation uptick and anticipation of potential Federal Reserve rate cuts.
Despite the overall inflation increase, core inflation, which excludes volatile food and energy prices, remained steady at 2.9 percent. This indicates that underlying price pressures remain significantly above the ECB’s 2 percent target.
Services inflation, accounting for nearly 45 percent of the harmonized index of consumer prices, stood at 4 percent in July, a slight decrease from the previous month’s 4.1 percent. Non-energy industrial goods experienced the lowest inflation rate, with an annual increase of just 0.7 percent.
Among Eurozone member states, Finland, Latvia, and Denmark recorded the lowest annual inflation rates at 0.5 percent, 0.8 percent, and 1.0 percent, respectively. Conversely, Romania, Belgium, and Hungary saw the highest rates at 5.8 percent, 5.4 percent, and 4.1 percent.
German inflation rises, Spain and Portugal see slowdown
Germany’s consumer prices rose by 2.6 percent year-on-year in July, reflecting a modest increase from the previous month’s 2.5 percent. Meanwhile, inflation eased in Spain and Portugal, with Spain’s harmonized inflation rate dropping from 3.6 percent to 2.9 percent and Portugal’s from 3.1 percent to 2.7 percent.
Eurozone current account posts record surplus
In a separate report, the ECB revealed that the Eurozone’s current account recorded a record €51 billion surplus in June 2024, up from €38 billion the previous month. Over the 12 months ending in June 2024, the surplus reached €370 billion (2.5 percent of Eurozone GDP), a substantial increase from €30 billion (0.2 percent) a year earlier.
For more economy news, click here.
