Inflation across the euro area held steady at 2.0% in 2025, matching June’s level and staying aligned with the European Central Bank’s (ECB) target. The stability reflects easing price pressures, giving the ECB confidence to maintain its cautious policy stance.
Meanwhile, inflation across the broader European Union rose slightly to 2.4%, compared with 2.3% in June. The modest uptick highlights uneven dynamics within the bloc, as some member states continue to grapple with higher consumer costs.
Breaking down the euro area figures, food, alcohol and tobacco recorded the highest inflation at 3.3%, up from 3.1% in June. Services inflation eased to 3.1%, its lowest reading in more than three years, signaling cooling demand pressures. Non-energy industrial goods saw a mild increase of 0.8%, while energy prices continued to decline, falling by roughly 2.5% year-on-year.
Core inflation, which excludes energy and food, remained steady at 2.
3%, suggesting that underlying price pressures are contained despite fluctuations in individual sectors.
The ECB, reassured by inflation staying at target, left interest rates unchanged at its latest policy meeting. Policymakers emphasized a data-driven approach, noting that while risks remain from global uncertainties, there is no immediate need for aggressive action.
Market observers now speculate that the central bank could consider an additional rate cut later this year if growth slows further, though expectations remain cautious.
