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Inflation is expected to have hit the European Central Bank's target rate in July

Eurozone inflation was 2% in July, according to a new flash estimate from the bloc, stable month-on-month and hitting the European Central Bank's target.

Food, alcohol and tobacco had the highest rate of price increases, hitting 3.3% compared with 3.1% in June. Meanwhile, inflation on services hit 3.1%, compared with 3.3% in June.

In particular, the heat came out of the energy market, with prices dipping 2.5% in July, compared with a 2.6% decline in June.

The core rate of inflation – which strips out volatile measures – is expected to be 2.3%, flat on the previous month.

The latest data comes following an ECB interest rate cut in June — the eighth time the central bank had cut rates in a year. The bank indicated it would likely pause at its next meeting due to trade uncertainty.

President Donald Trump's trade war has thrown a spanner in the works for its trading partners in predicting how hot inflation will be.

Read more: Markets head lower as Trump tariff deadline hits

Over the weekend, the EU and US unveiled a new trade deal ahead of Trump's 1 August deadline, which has soothed some officials' worries. The deal averts a default 30% tariff warned by the White House, but lays out a 15% rate some Europeans were unhappy with.

There is still some confusion about what the 15% will apply to. According to the White House, pharmaceuticals and semiconductors will fall under the tariff, with no mention of that number being the upper limit, for example.

But the EU says the two sectors will remain on the current 0% rate for now and until new global tariff rates are agreed. Any future tariffs, according to the EU, will be capped at 15%.

The European Commission's general outline, external of the deal, stressed it was not legally binding.