German inflation fell more than expected to 1.8% in July, data from statistics agency Destatis showed Thursday.
Economists polled by Reuters had anticipated inflation to dip to 1.9%. July’s reading compares to the 2% print recorded in June, which brought the German inflation rate in line with the European Central Bank’s target.
The figures are harmonized across the euro zone to ensure comparability. Euro zone inflation data is due later this week, with the reading forecast to come in at 1.9%.
So-called core inflation, which strips out food and energy costs, came in at 2.7% in July, unchanged from the previous month, the data showed. Meanwhile the closely watched services inflation print eased further from 3.3% in June to 3.1% in July.
Carsten Brzeski, global head of macro at ING, said in a note on Thursday that the latest data suggested Germany was “currently experiencing a process of disinflation.” Headline inflation is now expected to remain below, but close to the 2% mark, he added.
