Euro Area: Inflation rises to new record high in June amid broad based increases
Harmonized inflation jumped to 8.6% in June from May’s 8.1% reading, moving further above the European Central Bank’s target rate of 2.0% and marking the highest print on record. June’s result was due to faster increases in the price of energy, food, alcohol and tobacco and non-energy industrial goods. On the other hand, prices for services increased at a marginally slower pace.
On a monthly basis, harmonized consumer prices soared 1.1% in June, above May’s 0.8%. The annual rate of core inflation, which excludes volatile energy and unprocessed foods prices, rose to 4.6% in June from May’s 4.4% — also marking the highest print since records began.
Commenting on the release, Bert Colijn, senior economist at ING, noted:
“The big question for the second half of the year is when peak inflation will be reached. This is a very tough question to answer at this point because of the volatility around energy price developments and uncertainty around the persistence of second-round effects. We do see more disinflationary pressures ahead, as recessionary pressures are building in the eurozone and global commodity prices – excluding energy – have been coming off their peak.”