Harmonized inflation declines to lowest level since March 2021 in June

Harmonized inflation fell to 1.6% in June, following May’s 2.5% and falling below the Euro area average of 2.5%. June's figure marked the weakest inflation rate since March 2021. The reading was driven by falling prices for transportation, and a steep decline in housing and utilities prices. Moreover, prices for recreation grew at a more subdued pace. Accordingly, the trend pointed down, with annual average harmonized inflation coming in at 4.2% in June (May: 4.6%). Meanwhile, consumer price inflation fell to 1.5% in June from the previous month's 2.5%. Lastly, harmonized consumer prices were flat in June over the previous month, below May's 0.40% rise. June's result marked the weakest reading since January.

Unicredit’s Alenka Kreuzer commented: “We expect inflation […] to fall further until October, driven by lower prices for core goods and energy, but then to increase again to 3.0% by the end of the year due to a base effect in energy prices. Service prices will likely remain stickier due to strong wage growth.”

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