Eurozone inflation rises in line with expectations in June

Eurozone inflation rose in line with expectations in June at an annualised 0.1%, compared to a 0.1% drop in May, Eurostat confirmed in its final estimate on Friday.

Low fuel and gas prices continued to provide a drag on inflation, offsetting increased prices at restaurants, cafes, rents and tobacco.

Belgium registered the highest annual rate of inflation at 1.8% followed by Sweden at 1.2% while Cyprus and Bulgaria were at the other end of the scale with deflation of 1.9% and 1.2%, respectively.

The European Central Bank is targeting inflation of just below 2% and is under pressure to address a prolonged period of low consumer prices.

“Another underwhelming month of consumer price index data for ECB president Mario Draghi to contemplate, but stubbornly low inflation is one concern that, for now, is yet to be strongly affected by the UK’s Brexit vote,” said Dennis de Jong, managing director at UFX.com.

“Draghi won’t be distracted by the UK’s political wrangling, as his eyes will be drawn to other issues more within his control, such as how to help Germany maintain its strong start to the year or Greece’s continued participation in the euro.

“However, with trade deals to be negotiated and pressure on businesses on both sides of the UK/EU border to adapt in the post-Referendum world, we’ll soon see the real impact of Brexit to the Eurozone’s growth.”