Annual inflation in the eurozone fell more than analysts expected in June, falling to 5.5% from 6.1% in May, thanks to a sharp drop in energy prices, Eurostat said on Friday, AFP reported. That figure was slightly better than analysts polled by Bloomberg, who had expected a 5.6% reading, but not all numbers look good as food prices continue to accelerate.

Inflation in the EurozonePhoto: ANP / ddp USA / Profimedia

However, the increase in consumer prices remains particularly high for food products (11.7%), according to detailed data from the European Statistical Office.

Inflation remains well above the 2% target set by the European Central Bank (ECB), which has consistently raised key rates in an effort to contain it.

ECB President Christine Lagarde hinted on Tuesday that the institution would raise rates again at its July policy meeting after already doing so in June.

“Our work is not finished. Unless there is a significant change in our forecast, we will continue to raise rates in July,” she said.

Inflation almost halved compared to the October record

Inflation rose marginally to 7% in April (+0.1 points), ending a streak of five consecutive monthly declines. But since May, it has resumed its downward trend.

In October 2022, it reached a record level of 10.6% year-on-year, after a year and a half of continuous growth, accelerated by the war in Ukraine, in the context of the economic recovery after COVID.

In June, the consumer price index fell due to a 5.6% year-on-year drop in energy prices (fuel, electricity, gas, etc.) after falling 1.8% in May.

The main contributor to inflation now comes from food prices (including alcohol and tobacco), which rose another 11.7% in June, albeit at a slower pace than in May (+12.5%).

Similarly, the growth of prices for industrial goods (except energy carriers) slowed somewhat in June (+5.5%, after 5.8% in May). Instead, growth in prices for services accelerated to 5.4% from 5% in May.

According to Eurostat, among the 20 countries that use the single currency, the lowest inflation rates in June were Luxembourg (1%), Belgium (1.6%) and Spain (1.6%).

The consumer price index in France decreased by 0.7 points to 5.3% in annual terms. In Germany, on the contrary, inflation accelerated again in June, reaching 6.8% (+0.5 points). The highest rate was recorded in Slovakia (11.3%), ahead of Estonia (9%).