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The eurozone inflation fall means September's rate cut is a go" for the European Central Bank (ECB), according to Melanie Debono, senior Europe economist at Pantheon Macroeconomics, a consultancy.

For the ECB these data are broadly in line with the June expectations for the third quarter on the headline, but core inflation is looking somewhat stronger than the central bank expected. Still we think a rate cut by the ECB in two weeks' time is a decent bet.

Eurozone inflation is now just a touch above target, making it difficult for the bank to justify its current extremely restrictive monetary stance. Interest rates were raised to their current level when inflation was over 5% last year and wage growth figures are rolling over.

Services is expected to have the highest annual rate in August (4.2%, compared with 4.0% in July), followed by food, alcohol & tobacco (2.4%, compared with 2.3% in July), non-energy industrial goods (0.4%, compared with 0.7% in July) and energy (-3.0%, compared with 1.2% in July).

Eurozone inflation slowed to 2.2% in August from 2.6% in July, driven by energy price declines. This marked the slowest rate of price growth for more than three years and makes a rate cut at the European Central Bank's upcoming September policy meeting more likely.

However, the higher rate of core inflation and continually tight labour market will present risk factors to implementing looser monetary policy.