Eurozone June Inflation Confirmed at 0.1%

Higher prices in restaurants and cafes, for rent and tobacco products help break a two-month cycle of inflation.
By Laura Board ,

European consumer prices picked up pace in June to emerge from the shadows of deflation, final figures from the European Union's statistics arm confirmed.

The inflation rate was at 0.1%, up from minus 0.1% in May, while on the month prices rose by 0.2%, Eurostat said.

Consumer prices in the eurozone fell year-on-year in February, April and May but European Central Bank policymakers are counting on an uptick in price growth in the second half of the year.

The data, which follows a "flash" estimate of June prices released on June 30, comes before the European Central Bank meets next Thursday to set rates. Although policymakers have in recent days expressed concern about the impact of the U.K.'s decision to leave the European Union, pre-Brexit-vote minutes of their last meeting showed they planned to give existing monetary stimuli, including new quarterly tranches of cheap loans to banks, time to take effect.

In June, price growth at restaurants and cafes, for rentals and tobacco products led the growth, mitigating against declines in energy-related categories.

The leading economies of Germany and France posted price growth of 0.2% and 0.3%, respectively, though prices in third and fourth-ranked Italy and Spain fell 0.2% and 0.9%, respectively, on the year.

Across the wider 28-nation European Union, where price growth stagnated year-on-year, Cyprus, Bulgaria and Croatia posted the steepest year-on-year declines, with Belgium, Sweden and Malta reporting the biggest gains.

Separately May trade figures from Eurostat showed both imports and exports rose 2% from a year earlier, with the habitually higher exports figure resulting in a widening of the trade surplus to €24.6 billion ($27.4 billion) from €18.3 billion, slightly higher than expected.

"May's eurozone goods trade data suggest that net exports will have cushioned the likely slowdown in GDP growth in Q2. Further ahead, we expect the trade surplus to narrow further this year, as slower growth in foreign demand weighs on exports," wrote Capital Economics analysts.

European stock benchmarks remained down after the two sets of data, with the Stoxx 600 index down 0.61% at 336.43 and the Dax down 0.66% at 10,002.86. Stocks fell after an attack in the Southern French city of Nice left at least 84 people dead after a man known to police and of Tunisian descent drove a truck into crowds celebrating the Bastille Day holiday.

The euro was recently up 0.18% against the dollar at $1.1140.

Eurostat publishes its initial estimate for July inflation on July 29.

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