Euro Zone Inflation Edges up in 'Difficult Print' for ECB

A general view of a fruit and vegetable stand on a weekly market in Berlin, Germany, March 14, 2020. REUTERS/Annegret Hilse/File Photo Purchase Licensing Rights
A general view of a fruit and vegetable stand on a weekly market in Berlin, Germany, March 14, 2020. REUTERS/Annegret Hilse/File Photo Purchase Licensing Rights
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Euro Zone Inflation Edges up in 'Difficult Print' for ECB

A general view of a fruit and vegetable stand on a weekly market in Berlin, Germany, March 14, 2020. REUTERS/Annegret Hilse/File Photo Purchase Licensing Rights
A general view of a fruit and vegetable stand on a weekly market in Berlin, Germany, March 14, 2020. REUTERS/Annegret Hilse/File Photo Purchase Licensing Rights

Euro zone inflation unexpectedly edged up in July, data showed on Wednesday, although a widely watched gauge of price growth in the services sector eased.

Wednesday's figures did not seem to derail market expectations for an interest rate cut by the European Central Bank in September, but they were likely to strengthen concerns about a difficult last mile in the ECB's efforts to bring down inflation.

According to Reuters, price growth in the 20 countries that share the euro accelerated to 2.6% in July from 2.5% in June according to Eurostat's flash estimate.

A key measure of underlying growth in prices -- which excludes energy, food, alcohol and tobacco -- failed to show the expected decline and came in unchanged at 2.9%.

"It's a difficult print for the ECB," said Fabio Balboni, an economist at HSBC. "Disinflation on the goods side is coming to an end and services inflation remains high."

Still, Balboni stuck to his call for ECB cuts in September and December, as did investors in euro zone money markets, on expectations that inflation would eventually ease.

A general view of a fruit and vegetable stand on a weekly market in Berlin, Germany, March 14, 2020. REUTERS/Annegret Hilse/File Photo Purchase Licensing Rights.

"I still expect a second rate cut to come in September," said Kyle Chapman, a foreign exchange markets analyst at Ballinger Group. "I don’t think it matters too much if we get the odd data point that’s slightly stronger than expected."

Euro zone inflation has fallen a long way since briefly hitting double digits in late 2022, when it had been boosted in large part by a brisker-than-expected reopening of the economy after the COVID-19 pandemic and more expensive fuel in the wake of Russia's invasion of Ukraine.

But that progress has stalled in recent months as prices in the services sector got a boost from higher salaries.

In a small, positive sign for the ECB, services' price growth eased to 4.0% from 4.1% in June as an expected boost from the Olympics in Paris failed to materialise, with some consumers balking at what they saw as price-gouging.

"This kind of pushback bodes well for the medium term inflation outlook," economists at ABN-Amro wrote in a note.

The ECB has made clear it would not be swayed by individual data points and will focus instead on the broader trend for inflation, which it expects to bounce around current levels this year before pulling back towards its 2% target in 2025.

The central bank started cutting rates last month, paused in July and is widely expected to slowly dial back over the next 1-1/2 years some of the steepest hikes it has made in its 25-year history.



Saudi Arabia Unveils Pavilion at International Defense Exhibition and Conference in UAE

The Saudi pavilion is showcasing the latest technologies and advanced systems, underscoring the significant progress the Kingdom has made in localizing military industries, in alignment with the objectives of Saudi Vision 2030. (SPA)
The Saudi pavilion is showcasing the latest technologies and advanced systems, underscoring the significant progress the Kingdom has made in localizing military industries, in alignment with the objectives of Saudi Vision 2030. (SPA)
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Saudi Arabia Unveils Pavilion at International Defense Exhibition and Conference in UAE

The Saudi pavilion is showcasing the latest technologies and advanced systems, underscoring the significant progress the Kingdom has made in localizing military industries, in alignment with the objectives of Saudi Vision 2030. (SPA)
The Saudi pavilion is showcasing the latest technologies and advanced systems, underscoring the significant progress the Kingdom has made in localizing military industries, in alignment with the objectives of Saudi Vision 2030. (SPA)

The activities of the Saudi pavilion, organized by the General Authority for Military Industries (GAMI), kicked off on Monday at the International Defense Exhibition and Conference "IDEX 2025" in Abu Dhabi. This event is being held under the patronage of Sheikh Mohamed bin Zayed Al Nahyan, President of the United Arab Emirates.

Governor of GAMI Eng. Ahmad Abdulaziz Al-Ohali participated in the launch, in the presence of Lt.-Gen. Mohammad Bin Abdulrahman bin Hamed Al-Gharibi, Chief of Staff of the Royal Saudi Naval Forces, Sultan bin Abdullah Al-Angari, Saudi ambassador to the UAE, and a number of officials, international investors and decision-makers in the sector.

Al-Ohali emphasized the significance of the Kingdom's participation in IDEX 2025 as a leading global platform for showcasing the latest military technologies.

He underscored the importance of establishing international partnerships that enhance the Kingdom's defense and security capabilities.

The Saudi pavilion serves as a strategic window that reaffirms the Kingdom's commitment to developing its defense sector and strengthening national competencies, contributing to the ambitious goal of localizing over 50% of military spending by 2030, he added.

During the exhibition, GAMI signed a cooperation agreement in the field of government quality assurance with the Defense Acquisition Program Administration in South Korea.

The agreement aims to boost the assurance and reliability of defense products and services carried out under purchasing and acquisition operations, in accordance with the local laws and regulations of both sides.

The agreement reflects the mutual desire of both parties to deepen joint cooperation in the field of defense industry and technology, in a way that achieves the national interests of both countries. The two parties also intend to expand the scope of cooperation by exchanging experiences and best practices in the field of government quality assurance for defense products and services.

The Saudi pavilion is showcasing the latest technologies and advanced systems, underscoring the significant progress the Kingdom has made in localizing military industries, in alignment with the objectives of Saudi Vision 2030.

It is presenting the latest locally developed defense technologies across military, defense, and security industries. It features a variety of military products aimed at highlighting the capabilities of the defense and military sectors. Additionally, it presents investors with a conducive investment environment and the promising opportunities available in the sector.

In addition to GAMI and the General Authority for Defense Development (GADD), the pavilion includes the World Defense Show (WDS), along with several national companies operating in the military industries sector. The companies include the Saudi Arabian Military Industries (SAMI), the National Company for Mechanical Systems (NCMS), the Middle East Propulsion Company (MEPC), the Saudi Chemical Company Holding (SCCH), AlKorayef Group, Life Shield Military Industries (LIFE SHIELD), Emaan International, QUDRA Industrial Company, and the Saudi Company for Aircraft Maintenance and Preparation (GDC).