The CPI inflation in the Eurozone for June was 2.5% year-on-year, in line with market consensus. Core inflation remained at 2.9% year-on-year, slightly higher than the forecast of 2.8%. The inflation rate has been below 3% for some time now and is close to the ECB’s target of 2%.
On a monthly basis, prices increased by 0.2%. However, we continue to point out the persistently elevated inflation in services. Last month, service prices rose by 0.6% month-on-month, with the annual rate still at 4.1% year-on-year. Additionally, price pressure in this sector may persist in the coming months.
These data do not provide certainty regarding a sustained decrease in inflation to the target. ECB decisions remain data-dependent. The ECB has already begun a cycle of rate cuts, with the question remaining about the pace. It seems that this year we will see at most two more rate cuts of 25 basis points each.
Bartosz Wałecki, Analyst at Michael / Ström Brokerage House
