Food, alcohol & tobacco prices were expected to have increased by 9.8% in August on an annual basis, down from 10.8%, while services prices grew 5.5%, compared with 5.6% in July and non-energy industrial goods inflation slowed from 5% in July to 4.8%.

However, while energy was 3.3% cheaper than it was in August 2022, the decline was significantly below the 6.1% fall seen in July, signaling that room for further reduction of energy prices may be limited going forward.

Closely watched underlying, core inflation — which strips out volatile items such as food and energy — fell 0.2% to 5.3%, matching the headline inflation figure.

At 6.4%, Germany had the highest inflation of the big four euro economies — Germany, France, Italy and Spain — managing to shave just 0.1% from the pace at which prices were rising largely due to energy price inflation bucking the zone trend by accelerating to 8.3% and strong wages growth.

Italy delivered the strongest result, extending a run of three consecutive months with decelerating inflation into August by posting a 0.8% fall to 5.5%, down from 6.3% in July.

Headline inflation in Spain and France, by contrast, went in the other direction after months of declines.

While enjoying one of the lowest levels of inflation in the euro area, Spanish prices rose to 2.4%, from 2.1% in July.

French inflation surged by 0.6% to 5.7%, from 5.1% the previous month, making it the seventh worst eurozone economy for inflation behind Germany and Slovenia.

The fact the fall in inflation from October’s 10.6% peak has ground is likely to prompt the European Central Bank’s governing council to hike its key deposit interest rate for the tenth time in a row when it meets Sept. 14.

In July, the ECB raised all three key interest rates by 25 basis points, bringing the rates for refinancing, marginal lending and deposits to 4.25%, 4.50% and 3.75% respectively.