Eurozone inflation fell to its lowest level in three years this month due to falling energy prices, according to Euractiv.
This raised expectations of an interest rate cut by the European Central Bank (ECB) after a speech by the bank’s chief economist Philip Lane last weekend signalled continued caution.
Consumer price growth slowed to 2.2% in August compared to the same month last year after reaching 2.6% in July. The figures brought the ECB closer to its 2% target.
Inflation in August was the lowest since July 2021, in line with expectations of analysts at FactSet and Bloomberg. However, core inflation, which excluded volatile energy, food, alcohol, and tobacco prices, was a key indicator for the bank and fell slightly to 2.8 per cent in August from 2.9 per cent in July, according to Eurostat.
Meanwhile, energy prices fell 3 per cent in August after rising 1.2 per cent in July. Food and beverage prices rose 2.4 per cent this month in the eurozone, beating forecasts by 0.1 per cent.
The ECB launched an aggressive campaign to raise rates in July 2022 to tame soaring inflation, which peaked at 10.6 per cent in October that year.
Europe’s two largest economies also saw a welcome slowdown in inflation. According to Eurostat, Germany’s annual inflation rate was 2.0 per cent in August, down from 2.6 per cent in July.
Other Eurostat data released on Friday showed that the Eurozone’s unemployment rate fell slightly to 6.4 per cent in July from 6.5 per cent in June.
