Eurozone Inflation Eases To 2.8%

RTTNews | 71 days ago

(RTTNews) - Euro area inflation slowed to a three-month low in June as food, energy and services prices registered slower growth, easing pressure on the European Central Bank to hike interest rates again this month.

Inflation weakened to 2.8 percent from 3.2 percent in May, flash data from Eurostat showed Wednesday. This was the lowest rate since March and remained below the forecast of 3.0 percent.

Although inflation remained above the European Central Bank's 2 percent target, recent decline in oil prices put downward pressure on energy inflation.

Core inflation that excludes energy, food, alcohol and tobacco, softened to 2.4 percent from 2.6 percent in the prior month. Prices were expected to rise 2.5 percent. Final data is due on July 17.

With much lower oil prices and a sluggish economy, inflation risks are easing, ING economist Bert Colijn said.

"With uncertainty around the Middle East deal remaining, the ECB will appreciate some time to see how things play out and whether any force is still necessary," Colijn said.

Last month, the ECB raised its interest rates for the first time in nearly three years in a bid to cushion the impact of rising inflation. The bank raised the deposit rate by 25 basis points to 2.25 percent. The ECB is set to announce its next policy decision on July 23.

Latest data showed that annual growth in energy prices slowed to 8.7 percent in June from 10.8 percent. Services inflation came in at 3.2 percent, down from 3.5 percent.

Likewise, food, alcohol and tobacco prices grew at a slower pace of 1.6 percent after rising 1.9 percent in May. Meanwhile, the increase in non-energy industrial goods prices held steady at 0.9 percent.

Tags: EUR

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