Price pressures have continued to ease across Europe, increasing the prospects of further interest rate cuts later this year.

Euro-zone producer price inflation slowed to a 20-month low in July with prices falling by 0.4 per cent on the previous month. The figures make it even easier for the European Central Bank to cut interest rates by another half percentage point before Christmas, according to Mr Jim Power, investment director at Friends First.

Prices fell in all euro-zone countries, except Ireland and Sweden. The largest fall was in energy prices, which fell by 1.4 per cent from the previous month, the biggest monthly drop so far this year.