Euro-Zone Annual Inflation Dips In July, Remains Above Target

By BridgeNews The annual rate of euro-zone inflation declined for the second month in succession in July, coming in at 2.8%, according to Eurostat data. Analysts had forecast that the annual rate of inflation would be 2.9%, in a BridgeNews poll. The weaker-than-forecast reading was due to a 0.1% monthly decline in prices, below expectations that prices would not change during the month. Despite the fall, inflation still remains well above the European Central Bank's (ECB)price stability definition rate of below 2.0%. Furthermore the inflation rate in every euro-zone country was above the ECB's 2.0% ceiling. A sharp fall in the annual rate of energy inflation dominated the figures. The annual rate of energy inflation was measured at 2.9% in July, compared with 5.5% in the year to June and 13.4% in the year to July 2000. The fall in the annual growth of energy prices took 0.35% of the overall annual measure of inflation. Energy prices fell by 1.8% during July. Excluding energy prices, prices rose by 0.1% in July, to give an annual rate of 2.8%, unchanged from June. Food prices, the largest component in the index, fell 0.1% on the month, compared with a 0.2% rise the previous month. Core CPI, which excludes energy, food, alcohol, and tobacco, was up 0.1% on the month, although the annual rate fell 0.1% to 2.0%. The highest annual inflation rates in the euro zone were recorded in the Netherlands (5.2%), Portugal (4.3%), and Greece (4.2%). The lowest inflation rates were seen in France (2.2%) and Denmark (2.3%), while the rise in consumer prices in the UK was lower than in any country of the euro zone at 1.4% in July. Most of the countries in the euro zone enjoyed monthly falls in prices. Belgian prices fell by 1.3% in July and Finish prices dropped by 0.8%. German prices were unchanged, while French prices dropped 0.1%, and Italian prices rose by 0.1%.

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