FRANKFURT – Euro zone inflation fell further in July and most measures of underlying price growth also eased, in a largely comforting sign for the European Central Bank as it considers ending its severe run of interest rate hikes.
Consumer prices grew by 5.3 percent this month versus 5.5 percent in June, extending a downwards trend that started in the autumn. Excluding energy and unprocessed food, prices increased by 6.6 percent after a 6.8 percent rise a month earlier.
While this is still a far cry from the ECB’s 2 percent target, the reading may help policymakers argue that inflation in the euro zone is on a clear, albeit gentle, downward path and they can afford to skip raising interest rates at least at their next meeting.
“The latest data point has been consistent with the disinflation trend,” Frederik Ducrozet, head of macroeconomic research at Pictet Wealth Management, said.
Large sellers of consumer goods like Unilever, brewer Heineken and food giant Nestle have all signaled to varying degrees that they expected the bulk of the price hikes to be behind us.
