Lower prices for transport fuel and telephone calls soothed inflation in the 13 nations that share the euro to 1.8% in July, the EU statistical agency Eurostat said Thursday.
This confirms a first estimate for the month Eurostat published on July 31 and shows inflation easing from 1.9% in June, falling below the European Central Bank's target level for deciding whether it needs to raise interest rates to calm higher prices. The year-on-year rate's slowdown reflects an oil price spike last year as rising demand and a supply crunch saw prices soar.
Cheaper transport fuel and telecommunications had the biggest calming effect on inflation in July from a year ago, Eurostat said, followed by lower prices for IT equipment, audiovisual equipment, heating oil and garments. These more than compensated for people paying more at restaurants and cafes and the higher cost of education and tobacco. In the euro zone, France enjoyed the slowest rise in prices from a year ago, up just 1.2%.
German shoppers saw prices go above the euro average, with inflation coming in at 2%. Slovenia reported the highest rate at 4% but both Greece and Ireland tied for second place with a calmer 2.7%. Across the 27-nation European Union, the differences were more striking. Tiny Malta - which will join the euro next year - saw prices shrink by 0.2% while fast-growing Latvia posted a surging 9.5% inflation rate that makes it highly unlikely it could meet the strict standards to adopt the euro in the near future. Hungary faces a similar problem, with inflation of 8.3%. (press release - live-pr)