Annual inflation across the eurozone fell to 2.2% in August, down from 2.6% in July and matching market forecasts.
It marks the lowest rate of year-on-year inflation in the bloc since July 2021, setting the stage for an escalation of the European Central Bank’s monetary-easing policy.
It also brings the eurozone's inflation in line with the UK, where inflation also fell to 2.2% in August.
Services and food and alcohol contributed the most to inflation, adding 4.1% and 2.3% respectively, but this was offset by lower energy prices.
Last week, the European Central Bank reduced interest rates for the second month in a row to bring the bank rate down to 3.5% for the first time since April 2023.
Another rate call is due on 17 October- today’s inflation data will raise hopes of at least one more cut by the end of the year.
The ECB has been more aggressive in cutting rates compared to its counterparts in the UK and the US, but a decision from the latter this afternoon could see a jumbo 50-basis-point cut from the Federal Reserve.
The Bank of England is not expected to cut rates in tomorrow’s Monetary Policy Committee vote.