What to Expect from July’s CPI Data

Key TakeawaysCore inflation forecast to have risen by 2.2%.Inflation unlikely to rise again as cost pressures ease.ECB expected to cut interest rates again this year.

Preliminary eurozone inflation data for July will be released by Eurostat on Aug. 1.

Headline inflation is forecast to be 1.9% higher than July 2024 levels, according to FactSet consensus estimates, and below June’s reading of 2% year over year.

Core inflation, which shows prices without volatile components such as energy and food costs, is expected to be 2.2% higher year on year in July, below June’s reading of 2.3%.

“This could give the European Central Bank impetus to cut interest rates further, especially as the likelihood of inflation spiking again is low, following the announcement of a trade deal between the EU and the US,” says Michael Field, chief European market strategist at Morningstar.

Core inflation data shows further evidence that inflation is “firmly under control in Europe”, he adds.

In June 2025, services inflation remained the main driver of headline inflation, or HICP, with a contribution at 1.51 percentage points. The contribution of food, alcohol and tobacco stood at 0.59 percentage points, and the contribution of energy at -0.25 percentage points. Nonenergy industrial goods provided a 0.13 percentage points boost.

Why Are Eurozone Consumer Prices Cooling?

Oliver Rakau, associate director for macro forecasting at Oxford Economics, says that food and core goods prices may have seen slowing price gains in July “as the disinflationary impact from a stronger euro and weaker commodity prices unfolds.”

Comparisons with stronger energy prices in July 2024 will also contain price rises, he adds.

Martin Wolburg, senior economist at Generali Investments, expects euro area headline inflation to stay “slightly below” the 2% threshold over the coming months. Services inflation, which is the focus for ECB, is seen receding after the temporary rebound in June, driven by falling wage growth, he says.

After The Trade Deal, Where Next For European Stocks?

This week’s inflation reading could support investor sentiment further after the weekend trade deal, says Morningstar’s Field. “Equity markets in Europe have rallied hard in recent months. A supportive, and improving, macroeconomic environment has likely played a significant role in this.”

Will The ECB Cut Interest Rates Again?

The ECB kept interest rates unchanged at its monetary policy meeting on July 24, and economists expect one more cut this year. The deposit facility rate stands at 2% after eight rate cuts in just over a year. During the July 24 press conference, the European Central Bank said it will continue to assess the situation meeting by meeting, but said that “the inflationary phase of the past few years is now behind us”.

According to Konstantin Veit, portfolio manager at PIMCO, the ECB could cut interest rates once again in September when new staff projections available. But he also thinks the rate-cutting cycle could already have ended at the current 2% policy rate.

However, Oxford Economics’ Rakau thinks that the case for some additional monetary policy easing will build over the coming months, especially with the “disinflationary impetus” from import- and commodity-intensive parts of the consumer basket, such as food.

Roelof Salomons, chief investment strategist for the Netherlands at BlackRock Investment Institute, expects the ECB to cut interest rates one more time this year but he adds that it is less certain now.