Inflation rises in June

Inflation rose to 2.5% in June, up from May’s 2.3%. Looking at the details of the release, prices for food and non-alcoholic beverages, housing, water, electricity, gas and other fuels, and restaurants and hotels rose at a quicker pace in June. In addition, prices for recreation and culture rebounded from the previous month. On the flipside, price pressures for transport cooled. Annual average inflation fell to 4.6% in June (May: 5.1%). Meanwhile, harmonized inflation rose to 2.8% in June from the previous month's 2.7%. Finally, consumer prices dropped 0.20% in June over the previous month, a slightly smaller fall than May's 0.24% decline.

In the remainder of the year, inflation is set to average near June levels, fanned by stronger economic growth compared to H1. That said, over 2024 as a whole, price pressures will fall to less than a third of 2023’s average, curbed by cooling wage growth and the delayed impact of previous monetary policy tightening. Unexpected commodity price spikes are an upside risk.

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