Eurozone Inflation Drops to 2.8 Percent in June

Annual inflation in the Eurozone slowed to a three-month low of 2.8 percent in June, down from 3.2 percent in May. Data confirmed by Eurostat on July 17 matched earlier flash estimates and fell below the 3 percent projection. Core inflation, which excludes volatile energy, food, alcohol, and tobacco, also decreased to 2.4 percent from 2.6 percent.

The decline was driven by slowing price growth in energy, which dropped from 10.8 percent to 8.5 percent, as well as services and food. Within the European Union, inflation trends varied, with Greece seeing a decline to 3.9 percent from 4.9 percent. Romania reported the highest EU inflation rate at 9.2 percent, while Sweden recorded the lowest at 1.0 percent. Overall EU inflation stood at 2.9 percent.

The cooling rate reduces immediate pressure on the European Central Bank to raise interest rates during its July 23 policy meeting. However, economists warn that risks remain for September or October. Potential triggers for new rate hikes include volatile energy prices linked to conflict in the Middle East and food price increases resulting from heatwaves and fertilizer shortages.