Eurozone annual inflation remains at 5.3%
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Annual inflation in 20 eurozone countries in August remained at the level of July and amounted to 5.3% in annual terms, follows from the preliminary estimates Eurostat.
Price growth in the services sector slowed down from 5.6% in July to 5.5% in August, in the segment of non-energy industrial goods – from 5% to 4.8%. Prices for food, alcohol and tobacco rose by 9.8% compared to 10.8% a month earlier. At the same time, the decline in energy prices slowed down from 6.1% in July to 3.3% in August.
However, core inflation [показатель, в котором не учитываются цены на энергоресурсы и продовольствие] slowed down to 5.3% yoy, returning to the level of May. In June and July this figure was 5.5%.
Analysts polled by Reuters expected reducing inflation to 5.1%, and base inflation to 5.3%. Experts expect another increase by the European Central Bank (ECB) of the key rate by the end of the year and the start of its reduction from mid-2024. The next meeting of the ECB Board of Governors will be held on September 14.
At the end of July, the regulator raised by 0.25 p.p. all three rates: key – from 4 to 4.25%, margin – from 4.25 to 4.5%, deposit – from 3.5 to 3.75%. This was the ninth increase in a row, the key rate reached the highs of the 2008 financial crisis.
The ECB expects a significant slowdown in eurozone economic growth due to lower domestic consumer demand, tightening financial conditions and persistent inflation. Industrial activity will remain subdued due to weak external demand.
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