Eurozone inflation creeps lower to 2.5%

Eurozone inflation headed lower on Wednesday, coming in at 2.5% last month, new data showed. However, similarly to UK inflation, price rises in services remained persistent.

According to Eurostat, the statistical office of the European Union, the consumer prices index for the single currency bloc inched down from an upwardly revised 2.6% in May.

Prices were pushed higher in services, which rose by 1.84 percentage points, followed by food, alcohol and tobacco, up 0.48 percentage points and non-energy industrial goods, at 0.17 percentage points higher.

The lowest annual inflation rates were registered in Finland (0.5%), Italy (0.9%) and Lithuania (1.0%). The highest annual rates were recorded in Belgium (5.4%), Romania (5.3%), Spain, and Hungary (both 3.6%).

It comes as the European Central Bank (ECB) is expected to leave interest rates unchanged on Thursday after announcing a cut in June from 4% to 3.75%.

Pierre Veyret, technical analyst at ActivTrades, said: "Investors are choosing to remain cautious, likely waiting for stronger evidence that the ECB will cut rates rather than buying the rumour.”

“The STOXX-50 index trades slightly above a short-term bullish trendline following another impact over the 4,900pts zone.

“Sectoral performance remains mixed as a decline in tech shares offset positive performances in several other sectors.”

Read more: Interest rate cut in doubt even as UK inflation remains at Bank of England target

The news followed separate figures from the Office for National Statistics (ONS) which showed the UK's rate of inflation remained unchanged at 2% in June.

Prices rose at 2% in the year to June, unchanged from May and partly driven by hotel prices going up. Financial markets had expected a fall to 1.9% last month.

The largest upward contribution to inflation came from restaurants and hotels, with prices of hotels rising more than a year ago. The largest downward contribution came from clothing and footwear, with prices of garments falling in June after rising a year ago.

The core rate of inflation, which strips out energy, food, alcohol and tobacco, stayed at 3.5%.

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