Eurozone inflation falls to 2.5 percent in June, according to Eurostat estimate

Inflation in the euro area thus remains above the European Central Bank's (ECB) target of 2 per cent.

The inflation rate in the euro area slowed to 2.5 percent in June from 2.6 percent in May, Eurostat said in its flash estimate. The estimate does not include data for the entire European Union, so it does not include data for the Czech Republic for example.

Inflation rate highest in Belgium

Belgium had the highest inflation in June at 5.5 percent, while Spain (3.5 percent), Croatia (3.4 percent), the Netherlands (3.4 percent), Austria (3.2 percent), Portugal (3.1 percent) and Cyprus (3.1 percent) are also above 3 percent. By contrast, Eurostat recorded the lowest inflation in Finland (0.6 per cent) and Italy (0.9 per cent).

Eurostat expects services to have contributed 4.1 per cent to headline annual inflation in June, the same as in May. They will thus have the largest impact on inflation. Next is the food, alcohol and tobacco category, whose contribution to inflation is 2.5 per cent, compared with 2.6 per cent in May. Energy’s contribution to inflation is 0.2 percent, compared to 0.3 percent in May.eu

European Central Bank’s target missed

Inflation in the euro area thus remains above the European Central Bank’s (ECB) target of 2 per cent. The ECB started raising interest rates in July last year in order to bring inflation under control, but suspended the rate hikes last October. Since then it has held its key interest rate at 4.50 per cent, only now in early June did the Governing Council decide to cut interest rates by a quarter of a percentage point, as expected. The base rate thus fell to 4.25 per cent.

The ECB moved to cut interest rates for the first time since 2019. The bank pointed to progress in the fight against high inflation, but admitted that the fight is not yet over. ECB chief Christine Lagarde stressed that the bank will not stick to any pre-set scenario when cutting interest rates further and will make decisions based on the latest economic data.

Source: Czech Press Office

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