Eurozone inflation slows in June to 5.5% from 6.1%, but core inflation rises to 5.4% from 5.3% in May, reinforcing ECB’s stance

Eurozona IPC

The year-on-year inflation rate in the euro zone fell six tenths in June compared to the previous month, reaching 5.5%, compared to 6.1% in May, which is the lowest increase in prices since January 2022, according to preliminary data published Friday by Eurostat.

The moderation in the rise in prices in June is mainly due to the 5.6% fall in the cost of energy, compared with the 1.8% drop in May, while the rise in fresh food prices was 9%, six tenths of a percentage point lower than the previous month’s figure. However, in the case of services, prices rose by 5.4% year-on-year, four tenths more than in May, while non-energy industrial goods increased by three tenths less than the previous month, with a rise of 5.5%.

Excluding the impact of energy, the year-on-year inflation rate in June stood at 6.9%, compared with 7% the previous month, while excluding the impact of the price of food, alcohol and tobacco, the underlying inflation rate rose to 5.4% from 5.3% in May.

Thus, the underlying inflation rate in the euro zone, which had moderated in April and May, has accelerated again, reinforcing the stance of the members of the Governing Council of the European Central Bank (ECB) to maintain the current cycle of interest rate hikes.

Among the euro zone countries, the lowest inflation rates in June were observed in Luxembourg (1%), Belgium and Spain (both 1.6%), while the strongest price increases were recorded in Slovakia (11.3%), ahead of Estonia (9%) and Croatia (8.3%).

Among the largest euro economies, Germany’s inflation rate rose to 6.8%, up from 6.3% in May, while in France and Italy it fell to 5.3% and 6.7%, respectively.

Spain’s harmonised inflation rate of 1.6% widens the favourable price differential with the eurozone average to 3.9 percentage points from 3.2 in the previous month.

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