Preliminary data published by Eurostat showed that the eurozone annual inflation slowed sharply in August, confirming economists' forecasts and reaching its lowest level since July 2021. Meanwhile, core inflation dropped to a 4-month low. Overall, today's data is likely to strengthen the case for another ECB interest rate cut at the September meeting, even if price growth is likely to rebound towards the end of the year.
According to the report, the consumer price index rose by 2.2% per year, as expected, after increasing by 2.6% per year in July. Meanwhile, on a monthly basis, the consumer price index rose 0.2% after remaining unchanged in July. Economists also expected an increase of 0.2%.
Eurostat reported that the core consumer price index - excluding energy, food, alcohol & tobacco - rose by 2.8% per year, slowing compared to July (+2.9%), and confirming economists' forecasts.
The data showed that the annual growth of the overall consumer price index was due to an increase in the cost of services (+4.2% vs. +4.0% in July), food, alcohol & tobacco (+2.4% vs. +2.3%) and non-energy industrial goods (+0.4% vs. +0.7%). Meanwhile, energy prices fell by 3% after rising by 1.2% in July.