Eurozone inflation higher than expected in June, core inflation stable, mixed market reactions.

From Morningstar: 2024-07-02 07:13:00

Core inflation in the Eurozone remains high at 2.9% over the previous year, unchanged from May. In June, services were the biggest contributors to inflation at 4.1%, while food, alcohol, and tobacco came in at 2.5%. Non-energy industrial goods remained steady at 0.7%. Energy prices decreased to 0.2%.

European inflation fell to 2.5% in June, down from 2.6% in May. While the European Central Bank is focused on core inflation, which remained at 2.9% in June. This stability in core inflation suggests that the decrease in headline inflation was primarily due to volatile food and fuel prices.

Following the release of inflation data, European stock markets showed mixed reactions with Germany’s DAX down 0.9% and France’s CAC40 up 1.1%. Eurozone bond yields remained relatively stable, with Germany’s 10-year yield at 2.6% and France’s at 3.3%.

Despite the recent inflation figures, two rate cuts from the European Central Bank are still expected this year. ECB President Christine Lagarde emphasized that monetary policy will depend on data, with economists predicting two more rate cuts in the future. The next ECB meeting is scheduled for July 18, where further decisions will be made.



Read more at Morningstar: Eurozone Inflation Higher Than Forecast in June