Eurozone inflation slows in August in France and Italy, stays stable in Spain, as energy prices ease and the ECB mulls interest rate decisions

Eurozone inflation slows in August, providing fresh data that may influence the European Central Bank’s next move on interest rates in September.

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According to official statistics released on Friday, inflation eased in France and Italy, while remaining unchanged in Spain, signalling reduced pressure on consumers and businesses.

In France, annual inflation dropped to 0.9% in August, from 1.0% in July, driven by lower transport and energy costs, the INSEE statistics agency reported.

Using the harmonised index preferred by the European Central Bank (ECB), French inflation stood at 0.8%, down from 0.9%.

Similarly, Italy’s inflation rate slipped to 1.6% from 1.7% the previous month, largely due to easing energy prices. However, its harmonised rate remained steady at 1.7%, indicating a slight divergence in national and ECB-measured inflation trends.

In Spain, inflation held at 2.7% under the harmonised index. The modest change came as fuel prices rose slower than the same period last year, while food and electricity costs saw a slight decline.

Eurozone inflation slows in August just weeks after the ECB paused interest rate changes in July, following months of consecutive cuts. The ECB’s deposit rate currently stands at 2%, its lowest since late 2022.

The central bank is expected to closely monitor these inflation trends amid ongoing global pressures, including recent US-EU tariff negotiations.

A newly reached trade agreement cut proposed US tariffs on European goods from 30% to 15%, easing fears of further economic strain.

Also read: Inflation Slows in France, Italy Ahead of ECB Rate Call

Economists believe that persistent moderation in inflation could give the ECB room to maintain or even further reduce rates, though much depends on upcoming energy and trade developments.