Eurozone inflation slows slightly in June


The euro area inflation slowed in June driven by the slowdown in the energy price growth, preliminary data from Eurostat showed on Wednesday.

Inflation came in at 1.9 per cent in June, as expected, down from 2 per cent in the previous month.

The inflation rate had exceeded the European Central Bank’s target of “below, but close to” 2 per cent in May.

Core inflation that excludes energy food, alcohol and tobacco, eased to 0.9 per cent from 1 per cent in the previous month.

Energy prices advanced 12.5 per cent, but slower than the 13.1 per cent increase posted in the previous month.

Services cost grew at a slower pace of 0.7 per cent.

Food, alcohol and tobacco prices gained 0.6 per cent and non-energy industrial goods prices grew 1.2 percent.

Looking ahead, energy price inflation is likely to stay around its current level until the end of the year and then drop back, Andrew Kenningham, an economist at Capital Economics, said.

“We suspect that headline inflation will rise to over 2.5 per cent by the end of the year, but that it will then fall back to only around 1 per cent in 2022 and will stay low over the medium term,” the economist added.

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