MNI Eurozone Inflation Insight – July 2025

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• Eurozone July flash headline HICP printed slightly above expectations on Friday, at an unchanged 2.0% Y/Y (2.02% after 1.99%), while the median analyst was looking for a marginally lower 1.9% print.
• Underlying the headline ‘beat’ was a set of moving parts: Services inflation, at 3.13%, decelerated to a greater extent than expected, to its lowest Y/Y reading since March 2022 on a rounded basis, but non-energy industrial goods (‘core goods’) came in notably above consensus, at 0.75%, with changing or less significant seasonal summer clothing sales likely being at work. This made for a little changed and in line ‘core’ reading of 2.29% Y/Y in July.
• Services 3M/3M momentum meanwhile eased to 3.1% annualised after three months at circa 4.0% according to separate ECB seasonally adjusted data.
• Near-term ECB market-implied expectations currently stand at a mere 15% implied odds for another cut by the September meeting. A repricing thereof would likely have to be motivated through a material deterioration in sentiment amid the 15% US-EU trade deal or a significant undershoot in the August inflation round – especially in categories considered as indicative for persistent inflation pressures.
• Further out, markets continue to expect almost one more cut for the ECB current cycle which would mean a 1.75% terminal for the deposit rate, with 22bps of easing priced through March 2026.