Eurozone inflation eases slightly in June
Inflation is inching downwards since reaching a peak of 10.2 per cent in October 2022
THE eurozone’s annual rate of inflation cooled in June in line with analysts’ expectations, thanks to a slowdown in food and energy price rises, official data showed on Tuesday (Jul 2).
The European Central Bank (ECB) will welcome the slowdown in inflation again, but the rate has remained stubbornly above the Frankfurt-based body’s target of 2 per cent.
Consumer price increases in the single currency area stood at 2.5 per cent in June, down from a rate of 2.6 per cent in May, the European Union’s statistics agency said.
The May reading had been higher than expected, ticking above the rate of 2.4 per cent registered in April.
Economists surveyed by FactSet and Bloomberg had forecast that inflation would ease to 2.5 per cent in June.
Core inflation — which strips out volatile energy, food, alcohol and tobacco prices and is a key indicator for the bank — was unchanged at 2.9 per cent in June. Experts had expected it to cool to 2.8 per cent.
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Inflation has slowly come down since reaching a peak of 10.6 per cent in October 2022 following the outbreak of war in Ukraine, which forced the ECB to launch an unprecedented streak of interest rate hikes.
ECB ‘vigilant’
The ECB cut interest rates for the first time since 2019 on Jun 6.
The central bank’s officials have, however, tried to temper expectations of another cut to borrowing costs at their July meeting, saying there was no “pre-determined” rate path.
“Our work is not done, and we need to remain vigilant,” warned the ECB president Christine Lagarde on Monday.
“We will not rest until the match is won and inflation is back at 2 per cent,” she added in a speech in Portugal.
Economists view the chances of another cut at the ECB’s next meeting in July as low, but there are growing expectations that it could lower rates later this year.
The ECB in June also revised its predictions, expecting eurozone inflation to come in at 2.2 per cent in 2025. before falling to 1.9 per cent the following year.
Tuesday’s data showed energy price rises slowed to a rate of 0.2 per cent in June, down from 0.3 per cent in May.
Food, alcohol and tobacco price increases also eased to 2.5 per cent last month, a slight drop from 2.6 per cent in May, reported Eurostat.
Finland recorded the lowest inflation rate across the eurozone in June at 0.6 per cent, Eurostat data showed. Italy came in second, registering an inflation rate of 0.9 per cent. Belgium was the highest at 5.5 per cent.
Other Eurostat data published on Tuesday showed the unemployment rate in the single currency area was stable at 6.4 per cent in May, which marks a record low. AFP
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