Euro Area Facing Stubborn Price Growth

By Staff, Agencies

Core inflation in the Eurozone accelerated in June, the statistics agency Eurostat revealed last week.

In the 20 countries that share the euro, core consumer prices – which exclude food and energy – gained 5.5% year-on-year, up from a preliminary estimate of 5.4% and a reading of 5.3% in May, the data showed.

Economists polled by Bloomberg expect underlying inflation to exceed the overall figure up to the end of 2024.

“We expect sticky core inflation through summer will dominate the debate and push the ECB to deliver a last hike in September, to a terminal rate of 4%. The small upward revision to the core reading to 5.5% illustrates this tension,” said Bloomberg's senior economist, Maeva Cousin.

Although headline consumer price growth in the Eurozone has halved since its 10.6% peak in October 2022, economists are widely expecting further rate hikes by the European Central Bank [ECB], after the stubbornly high June inflation.

The ECB, which is scheduled to meet for a further rate revision next week, raised interest rates to their highest level in 22 years on June 15. The regulator moved the benchmark rate by 25 basis points to 4%, in a ninth consecutive increase.