CPI reached 2.2%, surpassing expectations
EU GDP surpassed expectations of 1.5%, reaching 2% for the quarter gone, according to Eurostat.
Among the EU nations for which data are available for Q2 2021, Portugal, up by 4.9%, recorded the highest increase compared to the quarter before.
Consumer price index (CPI), a measure that examines the weighted average of prices of a basket of consumer goods and services, reached 2.2%, 0.2% above analysts’ expectations.
The news comes amid concerns over inflationary pressures across the world and the potential impact.
Commenting on EU GDP and CPI, Jesús Cabra Guisasola, Associate at Validus Risk Management, said: “The eurozone economy expanded at a rate not since in decades, with GDP during Q2 rising at 2%. The strongest rebounds came from the southern countries as the economies continue lifting restrictions for the summer season. In addition CPI numbers in the Eurozone rose in July 2.2% and came above the market expectations of 2.0%. However, the core CPI was lower compared to a month ago and in line with most forecasters at 0.7% vs 0.9% in June.”
Similar to the Fed, Guisasola does not expect today’s news to compel the ECB to change its stimulus measures aimed at boosting the EU.
“Nevertheless, we do not expect these figures would change the ECB’s plan to continue supporting the economy with favourable financing conditions in the coming months, as the institution recently signalled the regions still a “long way to go” to recover from the pandemic. Moreover, the central bank recently changed its inflation target by letting the CPI to move above or below the 2% level when needed.”
The dollar lost ground against the euro over the past as the Fed took a dovish tone, according to Guisasola.
“On the FX market, the dollar has depreciated against the euro in recent days after the dovish tone from the Fed, and the disappointed Q2 GDP numbers from the US released yesterday, where the economy posted a growth lower than expected.”
Eurozone inflation fell in June amid a fall in the price of oil, according to data published last month.
Inflation across the EU was down by 0.1% from May to 1.9% in June.
The figure matched the European Central Bank’s inflation target of below but close to 2%.