Inflation in the eurozone fell to a three-year low of 2.2% in the year to August, confirming a flash estimate two weeks ago.

However, it still remains above the European Central Bank’s (ECB) 2% target despite the ECB cutting interest rates.

The Consumer Prices Index (CPI) came down from 2.6% in July, Eurostat said on Wednesday, while inflation across the European Union was at 2.4%, down from 2.8% in July. A year earlier, the rate was 5.9%.

The lowest annual rates were registered in Lithuania (0.8%), Latvia (0.9%), Ireland, Slovenia and Finland (all 1.1%).

The highest annual rates were recorded in Romania (5.3%), Belgium (4.3%) and Poland (4.0%). Compared with July 2024, annual inflation fell in twenty member states, remained stable in one and rose in six.

In a separate announcement, July's seasonally adjusted production and construction figures remained stable in the euro area and increased by 0.2% in the EU compared with June, according to flash estimates.

On an annual basis production fell by 2.2% in the euro area and 2.4% in the EU.

It comes as the ECB cut interest rates for second time this year last week to 3.5%. ECB president Christine Lagarde said the decision to lower the benchmark deposit rate was “unanimously decided”.

She signalled that more rate cuts were expected but downplayed the likelihood of one at its meeting in October.

The central bank kept its inflation forecast for this year at 2.5% and for next year at 2.2%.

Read more: UK inflation rate holds steady at 2.2% ahead of interest rate decision

On Wednesday, the Office for National Statistics (ONS) revealed that inflation remained above the Bank of England’s 2% target last month, as rate setters prepare to announce the next decision on interest rates.

The Consumer Prices Index (CPI), which tracks cost changes across the economy, rose by 2.2% in the year to August, according to data from the Office for National Statistics.

Core CPI, which excludes energy, food, alcohol and tobacco, rose by 3.6% in the 12 months to August 2024, up from 3.3% in July. Economists had expected a smaller rise in core inflation, to 3.5%.

It comes a day before Bank of England rate setters prepare to announce the next decision on interest rates.

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