Eurozone CPI slips more than expected m/m in July, likely to keep ECB disappointed

The final reading of consumer prices in the 19-nations bloc in July edged slightly higher on annual basis, in line with market expectations. Data released by Eurostat earlier on Thursday showed that eurozone CPI inflation recorded a 0.6 percent monthly decline, which was slightly larger than the 0.5 percent expected. Although, the annual rate was confirmed at 0.2 percent from 0.1 percent previously, unchanged from the rate seen in July 2015.

Meanwhile, the core measure, excluding alcohol, tobacco, food and energy, rose 0.9 percent y/y in the reported month, the same as in June, and matched forecasts. Energy prices fell 1.0 percent on the month with a 6.7 percent annual decline. The rate of inflation in the services sector increased to 1.2 percent from 1.1 percent previously, while prices of industrial goods rose 0.4 percent over the year.

ECB will likely be disappointed over near-term trends in inflation, especially the decline in underlying prices on the month. There will be further concerns that persistently low headline inflation will drag inflation expectations lower and make it even more difficult for the bank to raise inflation.

EUR/USD largely muted post-CPI data. Keeps moderate gains and trades around 1.1318 at 10:15 GMT, up 0.3 percent on the day.