Euro Zone Inflation Falls in July as Growth Picks Up in Second Quarter
BARCELONA — Euro zone inflation fell in July, according to preliminary data released on Monday, bringing some positive news to the region. Headline inflation was 5.3%, lower than the 5.5% registered in June, although it remains well above the European Central Bank’s 2% target for the 20-member bloc.
The euro area has been grappling with high inflation over the past year, leading the ECB to implement consecutive rate hikes in an attempt to bring prices down. Last week, the central bank increased rates by a quarter percentage point, bringing its main interest rate to 3.75%.
Initially, the high energy costs were driving most of the price pressures in the euro area, but in recent months, food prices have contributed the most. In July, food, alcohol, and tobacco prices rose by 10.8%, although this was lower than in previous months.
The inflation figures come as a relief amidst previously stagnant economic growth. GDP (gross domestic product) stagnated in the first quarter of this year, but new data released on Monday shows that growth accelerated in the second quarter, expanding by 0.3% — higher than the 0.2% expected by analysts.
While France and Spain’s economies proved relatively resilient in the second quarter, with France posting a GDP rate of 0.5% and Spain expanding by 0.4%, Germany’s economy was weaker and failed to show any growth in the same period.
This is a breaking news story and will be updated as more information becomes available.