Eurozone: Inflation Stable at 2% in August, in Line with ECB's Target

In its initial estimate published in early September, Eurostat reported inflation for the previous month at 2.1%, slightly above the European Central Bank's (ECB) target of 2%. This revision is primarily attributed to energy prices, which decreased by 2% year-on-year in August, slightly more than the initial decline of 1.9% calculated by Eurostat. Food prices increased at a slightly slower pace, rising by 3.2% compared to 3.3% in July. Similarly, service prices saw a minor decline of 0.1 percentage points, settling at 3.1%. In contrast, industrial goods prices remained stable at 0.8%, unchanged from the initial estimate. Core inflation, which excludes volatile energy and food prices and is closely monitored by experts, remained steady at 2.3% year-on-year across the 20 countries sharing the euro, with no revisions made. Within the eurozone, inflation has significantly eased since reaching a record high of 10.6% year-on-year in October 2022, driven by soaring energy prices linked to the Russia-Ukraine conflict. Since June, inflation has returned to the ECB's target level of 2% year-on-year. The ECB maintained its key interest rates last week, noting that inflation "is currently around the medium-term target of 2%" and that the outlook for price developments remains "largely unchanged."