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Euro area inflation unexpectedly falls to 1% in July

Euro area inflation unexpectedly falls in July

Unexpectedly, inflation in the euro area, measured by the consumer prices, decelerated further in July, piling more pressure on the European Central Bank to stimulate the eurozone economy.

CPI final reading slowed to 1.0 percent in the year ended July, missing both forecasts and flash of 1.1 percent, down from 1.3 percent in June.

Annual Core CPI, excluding volatile items such as energy, remained unrevised at 0.9 percent, matching forecasts, confirming an ease from 1.1 percent in June.

The data could raise predictions the ECB would have to act during its coming monetary policy meeting to bolster both growth and inflation in the euro area.

Analysts are predicting the ECB to restart its quantitative easing measures when the Governing Council convenes on September 12, while others are predicting a cut in the deposit rate beyond the current -0.4 percent.

In the second quarter, the German economy, Europe’s locomotive, fell 0.1 percent whilst the euro area growth slowed to 0.2 percent from 0.4 percent in the first three months of 2019.

As of 09:20 GMT, the euro traded higher for the first time in five sessions at $1.1102 after hitting a low of $1.1066 on Friday, the lowest since August 1.

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