Euro Area: Inflation inches down in June

Euro Area Inflation June 2021

Euro Area: Inflation inches down in June

Harmonized inflation came in at 1.9% in June, marginally down from May’s 2.0%, which had marked the highest print since October 2018. Inflation therefore landed on the European Central Bank’s target rate of near, but under, 2.0%. June’s result was due to softer increases in prices for energy and services, while the increases in prices for non-energy industrial goods and for food, alcohol and tobacco were faster.

On a monthly basis, harmonized prices rose 0.26% in June, matching May’s increase. Core inflation, which excludes volatile energy and unprocessed foods prices, was stable at 0.9% in June.

Commenting on the short-term outlook for inflation, Bert Colijn, senior economist at ING, stated:

“Overall, the small decrease in June headline inflation is not so relevant. What’s more important is the imminent surge in goods and services inflation. For now, most of the evidence points to this being largely temporary, but upside risks to the inflation outlook haven’t been this substantial in years and should keep the ECB on the edge of its seat.”

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