Eurozone inflation hits 2.0% in June

The annual inflation rate in the Eurozone is projected to reach 2.0% for June, up from 1.9% in May, according to a flash estimate released by Eurostat. This increase is primarily driven by a rise in service prices, which recorded a yearly inflation rate of 3.3% in June, compared to 3.2% the previous month. Meanwhile, food, alcohol, and tobacco prices saw a slight decrease in inflation, falling to 3.1% from 3.2% in May. Non-energy industrial goods also experienced a decline in inflation, dropping from 0.6% to 0.5%. Energy prices continued to decline, with a negative inflation rate of -2.7%, an improvement from -3.6% in May. Core inflation, which excludes energy, food, tobacco, and alcohol, remained steady at 2.3%.

Among major Eurozone economies, Germany's inflation rate decreased to 2.0% from 2.1%, while France's rate increased to 0.8% from 0.6%. Spain's inflation rose to 2.2% from 2.0%, and Estonia recorded the highest inflation rate at 5.2%, up from 4.6%. Cyprus had the lowest rate at 0.5%, slightly up from 0.4%.

The European Central Bank (ECB) recently announced its eighth rate cut, bringing the policy interest rate to its lowest level since December 2022. The ECB aims to stabilize inflation around its 2% medium-term target but remains cautious amid risks such as oil price fluctuations and tariff negotiations with the U.S.

Despite the inflation uptick aligning with the ECB's target, economic growth in the Eurozone is projected to remain below 1% for the year, influenced by ongoing trade tensions and geopolitical uncertainties. ECB President Christine Lagarde acknowledged the achievement of the inflation target but emphasized the need for continued vigilance in addressing potential economic challenges.