Eurozone Keeps Its Prices Steady, Inflation Holds at 2% This July
For the sixth consecutive month, the Euro‑area has enjoyed a calm under the inflation chart. July saw rates stay at 2 %, a drop from the 2.3 % and below over‑night it’s been experiencing for months. The trend is a punch in the face for Britain, which hasn’t seen inflation that low since October 2024.
Why the Prices Are Staying Put
- A buoyant Euro: Throughout 2025 the currency has been jolly strong, meaning imports are cheaper.
- Energy prices are dropping: Global supply dynamics keep energy costs falling, shaving away the inflation buff.
- Lower interest rates: The ECB cut rates in a “knife‑sharp” series of moves, keeping the deposit rate at 2 %. The aim was a fresh economic lift.
But time‑sees‑the‑world for growth: a modest 0.1 % rise in Q2 suggests the policy hasn’t lit the economy up just yet.
Facing Tariff‑Threat from the US
The ECB’s careful dance might be nudged off the stage by a 15 % tariff on EU goods headed for the U.S. This would edge up prices at home. The European Commission has averted an even harsher 30 % hit, thanks to recent negotiations led by Ursula von der Leyen, but the cost‑increase is still on the table.
German Chancellor Friedrich Merz has already warned of a potential inflation spike, and the ECB is likely to keep a watchful eye before pulling rates back down again.
What’s Next for the Eurozone Economy?
So far, the ECB’s strategy appears solid: inflation is discounted, rates are eased—giving growth a chance to flourish. However, looming trade tensions could shatter that calm, and the central bank may have to reassess its next move.
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