Eurozone CPI falls again in July

(Sharecast News) - Eurozone inflation slowed again in July, data from the European Union showed on Friday, raising hopes that the European Central Bank may slow its cycle of rate hikes.

Consumer prices increased by 5.3% in July versus 5.5% in the previous month, said statistics agency Eurostat. Core inflation, a key metric which excludes volatile items like food and energy, was confirmed flat at 5.5% from initial estimates

However, there was a pick up in services inflation to 5.6% from 5.4%, and economists said the "stickiness" would still be a worry for the ECB as wages continued to rise.

Pantheon Macroeconomics analysts said the disinflation in goods was now well underway, in line with the downshift in producer prices "and we think this trend will continue".

"We see non-energy goods inflation falling steadily in the next six months, hitting a trough of 1.5 - 2.0% by the middle of Q1. In services, meanwhile, stickiness is a concern for the ECB amid-still high wage growth, but the fever will soon break."

"Services inflation likely will rise a bit further in August, but should then begin a sustained decline to around 2.5% by the middle of next year. Overall in the core, we think inflation will dip in a touch in August, before a more accelerated downturn in September and October, continuing through Q4. We see core inflation falling to just over 2% by September next year, before rebounding."

Reporting by Frank Prenesti for Sharecast.com