Prices for consumer goods in the euro zone ascend for the initial time once more.
Eurozone inflation is climbing back up for the first time since May, with consumer prices rising by 2.6% annually in July, according to Eurostat's report on Tuesday. This was a slight increase from the 2.5% rate in June. This development makes the European Central Bank's (ECB) desired 2% inflation rate even more elusive. However, price increases have slowed down in some Eurozone countries; Finland (0.5%), Latvia (0.8%), Ireland (1.5%), and Italy (1.6%) are all experiencing inflation rates significantly below the average.
Contrarily, Estonia and the Netherlands experienced above-average price hikes of 3.5% each in July, and Belgium even saw a 5.4% surge.
In an early June move, the ECB reduced interest rates for the first time in two years. It might decrease rates again in September, as suggested by ECB Vice President Luis de Guindos, who stated that the central bank wants to ensure that inflation aligns with its definition of price stability by the end of 2025, which for the ECB means an inflation rate of 2%. With the revised economic forecasts set to be released in September, the ECB will have a clearer picture of its monetary policy standpoint. Currently, the ECB keeps the main deposit rate at 3.75%.
Eurostat's July report also indicated that Estonia and the Netherlands experienced inflation rates of 3.5% each, significantly higher than the Eurozone average. The ECB's next interest rate decision is scheduled for September, where a potential rate decrease might be considered to narrow the gap between actual and desired inflation.
