Global Courant
Gariguette strawberries for sale at the Saturday market of Annecy, France.
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Eurozone inflation was 5.5% in June, lower than analysts’ expectations, according to preliminary data, but core inflation, excluding energy and food, remains stubbornly high, rising to 5.4%.
Core inflation had eased in May from 5.6% in April to 5.3%.
Headline inflation is now at its lowest point since January 2022, data from Eikon shows, but remains well above the European Central Bank’s target of 2%.
Commenting on the divergence of the two main and core inflation movements, Bert Colijn, senior economist for the euro zone at ING, said in a Friday note that “this is mainly related to base effects from government support and the underlying trend remains disinflationary. sustained wage growth as unemployment remained at an all-time low in May.”
Falling energy prices contributed significantly to the fall in inflation. Some media reports attributed the sticky core fare to a rise in the cost of German train tickets, after the country offered a discounted pass around this time last year.
Inflation figures will be closely monitored by the European central bank, which on June 15 raised interest rates to the highest level in 22 years. who interrupted the walks during his last meeting.
The European Central Bank also revised its headline and core inflation expectations for the coming years at its interest rate meeting. It now expects inflation to average 5.4% this year, 3% in 2024 and 2.2% in 2025.
Christine Lagarde, president of the European Central Bank, said on Tuesday, before the latest figures, that inflation was still too high and that it is too early to declare victory over the rise in consumer prices.
Speaking at Portugal’s Sintra central bank event, she said: “Inflation in the Eurozone is too high and will remain so for too long. But the nature of the inflation challenge in the Eurozone is changing.”
“Inflation is moving in the right direction,” said Clémence Dachicourt, senior portfolio manager at Morningstar Investment Management Europe, pointing to a “rather uncertain” path as Lagarde pursues the ECB’s long-term objective. “The wage-price spiral, price increases driven by higher inflation, clearly remains a burden on core inflation. Therefore, it is probably still too early to lower our vigilance for negative inflationary surprises.”
