Access the Editor’s Digest for free
Receive a curated selection of top stories from Roula Khalaf, Editor of the FT, in our weekly newsletter.
In June, Eurozone inflation eased to 2.5 per cent, with services prices showing strong increases that offset weaker growth in energy and fresh food costs.
The data for the year to June indicated a slowdown from the previous month’s 2.6 per cent, in line with economists’ expectations.
The moderation in price rises across the euro area may provide some relief for the European Central Bank, which recently began cutting interest rates in anticipation of achieving its 2 per cent inflation target by the following year.
However, policymakers are likely to be concerned about the persistent high inflation in the services sector, which saw a 4.1 per cent increase in the year to June, matching the seven-month high recorded in May, as reported by the EU’s statistics office.
Energy inflation in June decelerated to 0.2 per cent from 0.3 per cent in May, while food, alcohol, and tobacco inflation remained steady at 2.6 per cent. Core inflation, excluding energy and food, stayed at 2.9 per cent, providing insight into underlying price pressures.
ECB president Christine Lagarde emphasized the need to monitor inflation trends closely due to uncertainties surrounding profit, wage, and productivity dynamics, as well as the possibility of new supply-side shocks affecting the economy.
“The robust labor market allows us the luxury of time to gather more data, but we must also acknowledge the lingering uncertainty in the growth outlook,” Lagarde stated in a speech at the ECB’s annual conference in Sintra, Portugal.
Unemployment in the Eurozone remained at a historic low of 6.4 per cent in May, with the number of unemployed individuals in the bloc rising by 38,000 to 11.1 million, according to separate data released by Eurostat.