Eurozone August Inflation Rate 2.2%... Lowest in 3 Years

The Eurozone (20 countries using the euro) recorded a consumer price inflation rate of 2.2% in August (flash estimate), according to Eurostat, the statistical office of the European Union (EU), on the 30th (local time).

On the 18th of last month (local time), the European Union (EU) flag was fluttering in front of the European Central Bank (ECB) headquarters in Frankfurt, Germany.
[Photo by Reuters Yonhap News]

This represents a 0.4 percentage point decrease from 2.6% in the previous month.

Bloomberg and others reported that this is the lowest level in about three years since mid-2021 and aligns with economists' forecasts.

It is also close to the European Central Bank (ECB)'s medium- to long-term inflation target of 2%.

The core inflation rate, which shows the underlying trend of prices, remained steady at 2.9% for three consecutive months from May to July but slightly dropped to 2.8% this month.

By sector, the energy inflation rate fell significantly from 1.2% in July to -3.0% in August, leading the overall slowdown in inflation. During the same period, industrial goods also declined from 0.7% to 0.4%.

In contrast, service prices rose slightly from 4.0% to 4.2%, and food, alcohol, and tobacco prices increased from 2.3% to 2.4%.

Germany, the largest economy in the Eurozone, recorded 2.0%, down 0.6 percentage points from 2.6% in July. Inflation rates also slowed in major countries during the same period: France 2.7 → 2.2%, Italy 1.6 → 1.3%, Spain 2.9 → 2.4%.

These figures strengthened expectations that the ECB will decide to cut interest rates at its monetary policy meeting on the 12th of next month.

However, foreign media noted that opinions remain divided on whether additional rate cuts will follow after next month.

Some caution against a sharp rate cut, citing the possibility of rising wage growth affecting service prices and the fact that inflation has not sustainably returned to the 2% target.