Inflation within the euro area holds steadfast at a rate of 2.0% in July, as affirmed by Eurostat.
The European Central Bank (ECB) received some positive news as the inflation rate in the Euro Zone remained steady at 2.0% in July, matching the rate from June. This development was confirmed by Eurostat on Wednesday.
The ECB closely monitors core inflation as it indicates underlying inflation trends. Core inflation, which excludes energy, food, alcohol, and tobacco, remained constant at 2.3%. This is the lowest level since January 2022, reflecting moderate underlying price pressures.
Services prices increased for the first time in two months, rising by 3.2% in July. However, this growth was slower compared to June's rate of 3.3%. The slowdown in services inflation helped offset faster price increases in food, alcohol, and tobacco, which rose by 3.3% in July, up from 3.1% in June.
Non-energy industrial goods prices also increased more than in June but still contributed relatively little to inflation, with a 0.18 percentage point increase. On the other hand, energy prices continued to decline, falling by 2.4% in July following a -2.6% drop in June. This downward trend in energy prices moderated overall inflation.
Services contribute the largest positive share to inflation (+1.46 percentage points), though the rate slightly eased from June. Food, alcohol, and tobacco saw a minor acceleration in price rises, contributing +0.63 percentage points. Non-energy industrial goods prices increased more than in June but remain relatively low in inflation contribution (+0.18 percentage points). Energy prices exerted a dampening influence on inflation, subtracting about -0.23 percentage points, due to ongoing price declines.
Financial markets widely expect the central bank to hold steady again in the next rate decision, scheduled for September 11. The ECB primarily steers its monetary policy through the deposit rate, which banks receive when they park excess liquidity with the central bank. The deposit rate is currently at 2.0 percent, the target rate of the ECB. The last time the ECB paused its series of rate cuts was in 2022.
In summary, a mix of slowing service inflation, modest acceleration in some goods, and falling energy prices has contributed to the stable 2.0% inflation rate in the Euro Zone as of July 2025.
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