The year-on-year inflation rate in the Eurozone maintains pressure on the ECB, despite falling two tenths of a point during the month of July compared to June. It thus reached 5.3%, which represents the lowest increase in prices since January 2023, as indicated by the preliminary estimate of Eurostat -and collected by Europa Press-, which nevertheless maintains the underlying rate at 5×5%. Meanwhile, the euro zone economy expanded by 0.3% in the second quarter of 2023 compared to the previous three months, when it had remained stable, also according to the preliminary estimate updated by Eurostat. In the European Union as a whole, GDP stagnated between April and June, after growth of 0.2% in the first quarter of the year.
Regarding inflation, the moderation in July of the rise in prices is mainly due to the 6.1% drop in the cost of energy, compared to the drop of 5.6 in June, while the increase in the price of fresh food was 9.2%. , two tenths above the data of the previous month. Likewise, in the case of services, prices rose 5.6% year-on-year, two tenths more than in May, while non-energy industrial goods became five tenths less than the previous month, with a rise of 5%. .
By removing the impact of energy from the calculation, the interannual rate of inflation in July stood at 6.7%, compared to 6.9% the previous month, while also leaving out the impact of the price of food, alcohol and tobacco, the core inflation rate has remained stable at 5.5%.
Among the euro zone countries, the lowest inflation rates in July were observed in Belgium (1.6%), Luxembourg (2%) and Spain (2.1%), while the most intense price increases were registered in Slovakia (10.2%), Croatia (8.1%) and Lithuania (7.1%). On its side, among the largest economies in the euro, apart from Spain, the inflation rate in Germany moderated to 6.5% from 6.8% in June, while in France it fell to 5% from 5, 3% and in Italy it stood at 6.4%, compared to 6.7% in June.
Energy and food costs
The rebound in Spain’s harmonized inflation rate to 2.1% in July reduced the favorable price differential with respect to the Eurozone average to 3.2 percentage points from 3.9 the previous month. In fact, among the countries of the euro zone, only Luxembourg, with an inflation rate in July of 2%, compared to 1% in June; Greece, with a rate of 3.4%, compared to 2.8% in the previous month; Spain, with 2.1%, compared to 1.6% in June; and Finland, at 4.2% from 4.1% the previous month, posted higher annual harmonized burst rates in July than in the previous month.
Compared to the second quarter of 2022, the GDP of the euro area grew by 0.6% and that of the EU by 0.5%. Among the EU countries for which data were available, the highest rate of quarterly expansion corresponded to Ireland (3.3%), ahead of Lithuania (2.8%) and France (0.5%). By contrast, the worst performing countries in the quarter were Sweden (-1.5%), Latvia (-0.6%), Austria (-0.4%) and Italy (-0.3%).
Likewise, between April and June, the German economy stagnated, after contracting 0.1% in the first quarter, while Portugal did not increase any in the second quarter either, after expanding 1.6% in the first three months of 2023.
Compared to the second quarter of 2022, the highest growth rates were in Ireland (2.8%), Portugal (2.3%) and Spain (1.8%). By contrast, the largest year-on-year decreases were recorded in Sweden (-2.4%), the Czech Republic (-0.6%) and Latvia (-0.5%).
