The euro area’s annual inflation rate eased in June, slipping by six tenths to 5.5 percent from 6.1 percent in May, according to preliminary Eurostat figures. This marks the slowest pace of price growth since January 2022, setting a new milestone in the eurozone’s ongoing price evolution.
Analysts attribute the June moderation largely to energy prices, which fell by 5.6 percent, compared with a 1.8 percent decrease in May. Fresh food costs also cooled, dropping by 9 percent, six-tenths lower than the figure recorded in 2019 data for the same period in the prior year. Despite these softer signals, price gains in other areas remained firmer. Services inflation rose by four-tenths relative to May, standing at 5.4 percent year over year, while non-energy industrial goods continued to grow, by 5.5 percent, even as that category showed a month-on-month dip of about three tenths. (Source: Eurostat)
When energy costs are excluded, the inflation rate for the year increased from 7.0 percent to 6.9 percent in June versus May. Food, alcohol, and tobacco kept rising, with core inflation ticking up to 5.4 percent from 5.3 percent in May. These dynamics underscore the persistent pressure from core components even as energy relief helps the average figure. (Source: Eurostat)
From a policy stance, the uptick in core inflation after a softer showing in April and May reinforces the case among European Central Bank Governing Council members to persist with the current path of policy-rate adjustments. The underlying price pressures suggest that monetary tightening may still be warranted to anchor expectations and support the convergence of inflation toward the ECB’s target. (Source: Eurostat)
Across the euro area, inflation dispersion remains notable. The quietest readings were observed in Luxembourg at 1.0 percent and in Belgium and Spain at 1.6 percent each. In contrast, Slovakia reported the strongest inflation spike at 11.3 percent, followed by Estonia at 9.0 percent and Croatia at 8.3 percent. These country-level variations highlight the uneven transmission of global and domestic price forces across the single currency bloc. (Source: Eurostat)
Looking at the major economies, Germany’s inflation rate moved higher to 6.8 percent in June from 6.3 percent in May. In France, inflation eased to 5.3 percent, while Italy saw a decline to 6.7 percent. Spain’s harmonized index rose to 1.6 percent, widening the favorable gap relative to the euro area average to 3.9 percentage points from 3.2 points the previous month. This widening gap underscores the divergent inflation trajectories among the eurozone’s largest economies during mid-2024. (Source: Eurostat)