Euro Area: Inflation remained at the target in July

A ccording to Eurostat’s Flash estimate, headline inflation reached 2% in July for the second consecutive month. Core inflation (excluding energy and unprocessed food) remained also stable at 2.4%. By main component we notice that service prices have decelerated at 3.1% YoY after 3.3% in June. In July prices of goods accelerated at +0.8% YoY from +0.5% in June. All in all, inflation was in line with expectations. Today’s print consolidates our view of an inflation under control. With no retaliation measures of the EU against US trade tariffs, we continue to believe that inflation will remain close to the ECB target (or slightly below) in the coming month. Thus, a last ECB key interest rates 25bp cut in September remains our preferred scenario . France : In July, HICP was 0.9%, stable from June . I nflation (CPI) was stable from June, with +1%, in line with expectations and Natixis forecast (1%). Energy prices felt at a faster rate than the previous month due to a base effect on gas prices (-7.2% YoY after -6.7% in June), while prices for manufactured goods decreased at the same pace as in June -0.2% YoY). In contrast, food (1.6% YoY, after +1.4% YoY) and service prices (+2.5 % YoY after +2.4 % YoY) slightly accelerated. We expect inflation to remain broadly stable in August, at 1% and averaging 1% in 2025 . Germany : Preliminary estimates indicate that the HICP slowed to 1.8% in July, falling short of the consensus expectation of 1.9%, after 2% in June. T he national CPI remained steady at 2% , as well as core inflation at 2.7% in July. The positive news is that inflation in services continued to normalize in July, dropping from 3.3% to 3.1%, while inflation for goods rose by 0.2 pp, increasing from 0.8% to 1%. For August, we expect anticipate a slight rebound of 0.1pp, bringing it to 1.9% and averag ing 2% in 2025 Italy : According to preliminary estimates, the HICP slowed to 1.7% in July , below the consensus expectation of 1.6%, after 1.8% in June. According to the national statistical office, goods prices decreased to +0.7% YoY (from 0.9% in June), and services prices reached 2.6% YoY (after 2.7% in June). Core inflation (national definition) remained at 2% this month as in June . According to our estimates, harmonized inflation should averag e 1 . 8% in 2025. Spain : The preliminary estimate of harmonized inflation for July reached 2.7%, +0.4 pp compared to June . Core inflation (excluding energy and unprocessed food) rose slightly to 2.3% from 2.2% in June. With no details at this stage, the statistical office indicated that the increase in headline inflation is primarily attributed to a rise in electricity prices in July 2025, whereas they were decreasing a year ago. We expect inflation to reach 2.5% on average in 2025 .