December 25, 2024

People shop at Lafayette Market in downtown Toulon on July 27, 2024.

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The European Union’s statistics agency said on Wednesday that the euro zone’s overall inflation rate unexpectedly rose to 2.6% in July., Although price growth in the services sector slowed slightly.

The inflation rate in June was 2.5%, down slightly from 2.6% in May. Economists polled by Reuters had expected July’s overall figure to be unchanged from June’s 2.5% reading.

Core inflation, which excludes volatile energy, food, alcohol and tobacco prices, hit 2.9% in July, compared with a Reuters forecast of 2.8%. This compares to June’s core reading of 2.9%.

The widely watched services industry inflation rate in July was 4%, down from 4.1% in June.

Unified inflation rates edged higher in several major euro zone countries, including major economies Germany and France. The inflation rate in both countries was 2.5% in June and rose to 2.6% in July.

The inflation rate was released a day after the region’s second-quarter gross domestic product was released, with Eurostat saying it rose 0.3% in the three months to the end of June.

That was higher than the 0.2% growth expected by economists polled by Reuters, even though Germany, the euro zone’s largest economy, reported a 0.1% contraction.

Investors will now weigh how the new data will affect the trajectory of possible future interest rate cuts from the European Central Bank. After lowering interest rates in June, the European Central Bank held a meeting earlier this month to keep interest rates steady. At the time, it left open the option of another rate cut in September.

The Governing Council of the European Central Bank stated that it will continue to consider the dynamics and prospects of inflation, as well as the strength of monetary policy transmission, in its decision-making. It emphasized that this was “not a pre-commitment to a specific interest rate path”.

This is a breaking news story and will be updated.

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