Euro zone inflation July 2025

Euro zone inflation was unchanged at a higher-than-expected 2% in July, flash data from statistics agency Eurostat showed Friday.

Economists polled by Reuters had expected the figure to hit 1.9%, after a 2% reading in June.

So-called core inflation, which strips out more volatile food, energy, alcohol and tobacco prices, came in at 2.3% in July, the same level as during the previous two months, Friday’s data showed.

The closely watched services print meanwhile eased to 3.1% in July after picking up slightly to 3.3% in June.

Following the data release, the yield on Germany’s 10-year bond was more than one basis point higher, while the French 10-year bond yield was up by less than one basis point.

Looking ahead, the fresh inflation data does not suggest that the European Central Bank will pick its interest rate easing cycle back up soon, Jack Allen-Reynolds, deputy chief euro zone economist at Capital Economics, said in a note.

The ECB at its July meeting held rates steady for the first time this year. Markets were last pricing in an over 94% chance of the central bank also keeping rates unchanged when it next meets in September, according to LSEG data.

Allen-Reynolds added that, depending on energy prices, euro zone inflation could in fact fall below the 2% ECB target later this year and next year.

“But the undershoot should be quite small and we suspect that core inflation will remain close to 2%. And given that ECB policymakers are content with the current monetary policy stance, we doubt that inflation falling slightly below 2% due to lower energy prices would be enough to prompt another interest rate cut,” he added.

The inflation figures follow on the footsteps of indications earlier this week that showed the euro zone economy expanded by a better-than-expected 0.1% in the second quarter, which was nevertheless sharply down on the 0.6% growth of the three months to the end of March.

Analysts interpreted the data as Europe’s economy so far showing resilience in the face of U.S. President Donald Trump’s tariff policies. The European Union and Washington recently inked a trade agreement which includes a 15% baseline levy for EU goods bound for the U.S. Sectoral tariffs and temporarily reduced so-called reciprocal duties have already been in play.

Duties are widely expected to weigh on economic growth, including in the euro zone, and affect prices of goods for U.S. consumers. Their impact on inflation in Europe remains uncertain.