Eurozone inflation eased to 2.8% in June from 3.2% in May and fell below expectations for 3.0% rise, while core inflation, that excludes the most volatile components, fell to 2.4% last month from 2.6% in May and undershot 2.5% forecast.
Lower prices of energy and food were mainly behind June’s better than expected numbers that eases pressure on the European Central Bank to raise interest rates again amid increased price pressures.
Although the bloc’s inflation remains well above the central bank’s 2% target, growing optimism over the recent decline in oil prices on prospects for a peace deal between the US and Iran, has raised hopes that inflation would continue to ease.
In the latest comments, ECB policymakers highlighted that there is no rush for the central bank to follow up 25 basis points rate hike on June 11 policy meeting, as June CPI numbers provide relief and more time for further evaluation of price pressure dynamics.
However, many economists think that the ECB is likely to raise rates again in September or October, as energy prices remain above pre-war levels and overall situation is still fragile, with renewed tensions to keep the price outlook volatile.
