Eurostat, the European Union’s statistics released flash estimate CPI data today which gave an indication that Euro zone inflation fell lower than predicted in the month of July, based on a year-on-year calculation.
CPI was estimated to be 2.5 percent year-on-year in July, despite economists forecasting it to remain the same as June’s 2.7 percent rise.
The Eurostat estimate calculates the change in the price of goods and services purchased by consumers based on energy prices and EU member states that report early CPI data. The data does not provide monthly price growth data or any breakdown of the numbers. Consumer prices account for a majority of overall inflation, which is important to currency valuation.
The lower inflation data gives rise to speculation now that the European Central Bank might reconsider raising interest rates again. Economists had been prediction a third rate rise this year, which would take borrowing costs to 1.75 percent from the current 1.5 percent. Just earlier this month the ECB raised interest rates for the second time this year. However, the central bank’s target is to keep inflation at below, but close to 2 percent.