Eurozone inflation slows in June as energy prices cool
BRUSSELS, BELGIUM: Eurozone inflation slowed in June after spiking as the US‑Iran war sent energy prices sky‑high, new data showed on Wednesday, boosting chances the European Central Bank will keep interest rates on hold.
Consumer prices in the 21‑nation single‑currency area rose 2.8% compared with the same month a year earlier, down from 3.2% in May, said EU statistics agency Eurostat.
Cooling fuel prices following the US‑Iran deal on ending the war were mostly to thank for the headline figure dropping back towards the ECB's inflation target of 2%.
Energy prices rose 8.7% across the single‑currency area in June, down from 10.8% in May.
Inflation in food and services also slowed — respectively down 0.3 points to 1.6% and 0.3 points to 3.2% — with inflation in industrial goods holding steady at 0.9%.
Coming a day after national data showed inflation slowing in all three of the eurozone's largest economies — France, Germany and Italy — the June fall was more marked than the 3.0% predicted by analysts polled by Bloomberg.
Of particular importance for the ECB, core inflation — which strips out volatile energy and food prices — came back down to 2.4% after ticking up to 2.6% a month earlier.
The tame inflation data raised hopes that the ECB — which raised rates last month for the first time since 2023 — will not need to do so again when it next meets on 23 July.
"This makes us more confident in our view that the ECB will not raise interest rates any further," wrote Jack Allen‑Reynolds at Capital Economics, which predicted eurozone inflation would keep dropping to about 2.5% in July.
"The improving inflation outlook means we don't expect any further rate hikes," echoed Tomas Dvorak of Oxford Economics.
ECB president Christine Lagarde already told European lawmakers last week there was no need for "forceful" action, citing falling energy prices and the lack of knock‑on effects such as higher wage demands that could further stoke inflation.
By RSS/AFP
