Eurozone moves away from deflation in July

The flash reading from Eurostat, Europe’s statistics office showed eurozone inflation rose to 0.2 percent in July from 0.1 percent in the previous month. Inflation was at its highest since the end of last year and better than analysts' expectations of 0.1 percent.

Nascent inflationary pressure in the bloc was a welcome sign after the eurozone managed to escape a four-month deflationary episode in June. Prices were pushed up by food, alcohol and tobacco which rose 1.4 per cent this month, closely followed by a 1.2 per cent rise in services. Energy prices fell 6.6 per cent, compared to 6.4 per cent in June.

Core inflation remained unchanged at 0.9 percent in July. Analysts had expected it to slip to 0.8 percent. Eurozone data followed a robust 0.4 percent rise in headline consumer prices in France and Germany.

Meanwhile, the eurozone unemployment rate for June came in as expected at 10.1 percent. Data was stable compared to May 2016 and down from 11.0 percent in June 2015. This remains the lowest rate recorded in the euro area since July 2011.