ECB likely to delay interest rate hike

THE European Central Bank (ECB) is likely to delay its next interest rate hike as figures show inflation is still high in the EU.

The figures also showed that Ireland recorded the lowest annual inflation rate in the EU last month.

Eurostat data showed that inflation was 1% in Ireland last month compared with a year earlier.

This European measure of inflation differs from that of the Consumer Price Index of the Central Statistics Office as it excludes mortgage interest costs.

In Slovenia, inflation was 1.1%, while it was 1.6% in Sweden. At the other end of the scale, the highest was in Estonia at 5.3% followed by Romania (4.9%) and Lithuania (4.6%).

Eurozone annual inflation was 2.5% in July, down from 2.7% in June, which exceeds the ECB’s 2% limit for an eighth month.

Euro monthly inflation was down 0.6% in July. In Ireland, the rate was down 0.2%.

Alexander Koch, an economist at UniCredit Group in Munich said he expects price pressures to remain elevated during the coming months.

“Still, with the euro-area economy slowing down, the ECB will probably be forced to delay the next rate hike at least until the end of the year,” he said.

The ECB will hold its next monetary policy assessment on September 8.

In Germany, annual inflation jumped to 2.6% in July from 2.4% a month earlier. French consumer-price growth slowed to 2.1% from 2.3% in June while Italian inflation slowed to 2.1% from 3%.

The areas showing the highest annual rises in inflation in the eurozone were transport (5.5%), housing (5%) and alcohol and tobacco (2.9%), with clothing (-2.9%), communications (-1.6%) and recreation and culture (0.4%) at the opposite end of the scale.