Euro zone inflation, July 2024

Headline inflation within the euro zone unexpectedly rose to 2.6% in July, the European Union’s statistics company mentioned Wednesday, at the same time as worth progress within the companies sector eased barely.

In June, inflation had are available in at 2.5%, easing barely from the two.6% of Might. Economists polled by Reuters had been anticipating the headline determine for July to be unchanged from June’s studying at 2.5%.

Core inflation, which excludes extra unstable power, meals, alcohol and tobacco costs, hit 2.9% in July, versus a Reuters estimate of two.8%. The determine in contrast with a core print of two.9% in June.

The broadly watched companies inflation print got here in at 4% for July, down from the 4.1% of June.

Harmonized inflation inched increased in a number of key euro zone international locations, together with in main economies Germany and France. In each international locations, inflation had been at 2.5% in June and picked as much as 2.6% in July.

The inflation charges come only a day after the discharge of the zone’s second-quarter gross home product knowledge, which the European Union’s statistics workplace mentioned grew 0.3% within the three months to the top of June.

This was above the 0.2% progress that economists polled by Reuters had anticipated, and got here even because the euro zone’s largest economic system, Germany, reported a 0.1% contraction.

Traders will now weigh how the contemporary knowledge will affect the European Central Financial institution’s trajectory for potential future rate of interest cuts. The ECB held charges regular when it met earlier this month after lowering them in June. On the time, it left open the choice for one more lower in September.

The ECB Governing Council mentioned it might proceed to think about the dynamics and outlook of inflation, in addition to the power of financial coverage transmission in its decision-making. It careworn that was “not pre-committing to a selected fee path.”

Julien Lafargue, chief market strategist at Barclays Personal Financial institution, on Wednesday mentioned that the newest inflation figures are unlikely to considerably affect the outlook for rates of interest.

“Whereas the hotter-than-expected headline inflation could possibly be seen as a setback for the ECB, we do not suppose it essentially modifications the narrative. Certainly, financial progress stays subdued — together with the Q2 GDP print — which ought to assist inflation stay on a downtrend,” he mentioned.

The ECB may due to this fact nonetheless lower rates of interest in September, Lafargue famous.