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Eurozone inflation fell in line with expectations to 5.3 per cent in July after the single currency bloc returned to growth in the second quarter.

Eurostat, the EU’s statistical office, said inflation in the 20-country single currency bloc was down from 5.5 per cent in June.

But core inflation, which excludes energy and food prices to give a clearer sign of underlying price pressures, was unchanged at 5.5 per cent.

This was a setback for the European Central Bank, which raised interest rates for the ninth consecutive time last week and has said it will keep doing so until underlying price pressures are clearly falling towards its 2 per cent target.

Hopes of a soft landing for the eurozone economy were bolstered by separate figures from Eurostat showing the eurozone economy rebounded with growth of 0.3 per cent in the second quarter, despite the ECB’s unprecedented rise in borrowing costs in the past year.

This is a developing story

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