Eurozone Inflation eases in August

Inflation in the Eurozone slowed slightly in August, however, it remained just above the European Central Bank’s (ECB) target rate of below, but close to 2.0%. It fell to 2.0%, down from 2.1% in July. While Core inflation, which excludes volatile commodities, slowed to 1.0% in August from 1.1% in July. This lower turnout for Inflation was driven by a slowdown in energy prices as well as in Services and Industrial goods. We believe that the marginal decline in inflation will not deter the ECB from winding up its asset buyback programme by December 2018. However, the ECB will need to ensure that Core inflation improves towards a higher sustainable level before it can join the United States Federal Reserve in raising interest rates.

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