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 percent in June, as expected, down from 2 percent in the previous month.

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

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

Energy prices advanced 12.5 percent, but slower than the 13.1 percent increase posted in the previous month. Services cost grew at a slower pace of 0.7 percent.

Food, alcohol and tobacco prices gained 0.6 percent 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 percent by the end of the year, but that it will then fall back to only around 1 percent in 2022 and will stay low over the medium term,” the economist added.

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