Euro area annual inflation is expected to be 1.1% in July 2019, down from 1.3% in June, in line with expectations, according to a flash estimate from Eurostat. The headline inflation rate was the lowest reading in 17 months.

Looking at the main components of euro area inflation, food, alcohol & tobacco is expected to have the highest annual rate in July (2.0%, compared with 1.6% in June), followed by services (1.2%, compared with 1.6% in June), energy (0.6%, compared with 1.7% in June) and non-energy industrial goods (0.4%, compared with 0.3% in June).

Core inflation, which strips out the volatile components of unprocessed food and energy and which the ECB closely looks at in policy decisions, also fell to 1.1% in July from 1.3% in June. The even more narrow measure excluding also alcohol and tobacco prices that many market economists look at was down to 0.9% from 1.1%.