Europe’s Inflation Rate Falls To Three-Year Low Of 2.2%

Inflation across the European Union (EU) declined to an annualized rate of 2.2% in August, its lowest level in three years.

Data from statistics agency Eurostat showed that inflation fell from a 2.6% annualized rate in July, matching the consensus expectations of economists.

Core inflation, which excludes volatile energy, food, alcohol and tobacco prices, dropped to 2.8% in August from 2.9% in July, also matching economists’ forecasts.

The continued decline of inflation bolsters expectations for a September interest rate cut from the European Central Bank (ECB).

The August inflation reading across the 27 countries that comprise the European Union was pulled lower by Germany, its biggest economy, where inflation dropped to 2% during the month.

Inflation also cooled due to moderating wage growth across the European continent.

Futures traders have fully priced in a 25-basis point interest rate cut from the European Central Bank at its next policy meeting in September.

Europe’s central bank previously cut interest rates by 25-basis points in June, citing a combination of declining inflation and slowing economic growth as the impetus for the move.


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