Inflation in the Euro zone has fallen to 2.5 per cent in June, according to figures recently released. Despite this slight decrease from the 2.6 per cent noted in May, there are ongoing worries about the surge in services prices which have counterbalanced the reduced growth in energy and fresh food costs.
Economists predicted this rate correctly in a Reuters survey, showing no shock in the depreciation. The easing of climbing prices across the 20 Euro-encompassing countries should, however, offer a breath of relief for the European Central Bank (ECB), which had begun to decrease interest rates last month in anticipation of attaining its inflation target of 2 per cent by the coming year.
Nevertheless, the persistent upswing in the sector’s prices, which witnessed a 4.1 per cent rise in the year leading to June, remains a concern for the rate determiners. Eurostat released data showing that this increase mirrored the highest seven-month peak that was reached back in May.
Also revealed by Eurostat, was a drop in energy inflation from 0.3 per cent in May to 0.2 per cent in June. There was steady inflation in the costs of food, alcohol, and tobacco at 2.6 per cent. Core inflation, which provides a clearer view of the underlying pressure on prices by excluding energy and food, stayed put at 2.9 per cent.
In her address to open the ECB’s annual conference in Sintra, Portugal on Monday evening, ECB’s President, Christine Lagarde stated that the bank needs to “take time” to evaluate if inflation has been reined in, given the high measure of uncertainty surrounding “how the nexus of profits, wages and productivity will evolve and whether the economy will be hit by new supply-side shocks”.
Ms Lagarde further stressed the need to remain aware of the overall growth outlook’s fluctuating nature. She mentioned that the robust state of the labour market allowed them to gather new information over time. According to further data from Eurostat released on Tuesday, unemployment remained steady at a record low of 6.4% in May, with the total number of unemployed individuals in the Euro zone climbing by 38,000 to stand at 11.1 million.