According to preliminary data from Eurostat released on Friday, inflation in the Euro zone dropped to a three-year low of 2.2% in August. This decrease from July’s 2.6% aligns with the projections made by economists surveyed by Reuters.
The core inflation rate, which excludes volatile components such as energy, food, alcohol, and tobacco, also registered a decline from 2.9% in July to 2.8% in August, in line with expectations.
The moderation in inflation was notably influenced by Germany, the largest economy in the Euro area, where price increases cooled more than anticipated to 2% for the month on a harmonized eurozone basis.
Economists at ING anticipate that core inflation in the Euro zone will persist above 2.5% for the remainder of the year, driven by stability in both goods and services.
Market expectations as of Thursday indicate a potential 25 basis points interest rate cut by the European Central Bank in September, following the initial reduction executed in June.
