Core
inflation,
which
shows
prices
without
energy
and
food
costs,
came
in
2.9%
over
a
year
earlier,
the
same
level
as
in
May,
but
higher
than
the
2.7%
rate
seen
in
April.
In
June,
the
greatest
contributors
to
eurozone
inflation
were
services
(4.1%,
the
same
rate
as
in
May),
followed
by
food,
alcohol
and
tobacco
(2.5%,
down
from
2.6%
in
May),
non-energy
industrial
goods
(0.7%,
stable
compared
to
May)
and
energy
(0.2%
vs
0.3%
in
May),
according
to
Eurostat
estimates.
Core
Inflation
Remains
High
“Flash
readings
for
June
showed
European
inflation
falling
once
again,
back
to
2.5%,
down
10
basis
points
from
May’s
reading.
Although
we
still
expect
some
volatility
in
inflation
readings,
June’s
downward
move
is
most
welcome,
and
reaffirms
the
ECB’s
action
in
cutting
rates
last
month,”
says
Michael
Field,
European
market
strategist
at
Morningstar.
“Core
inflation,
the
measure
the
European
Central
Bank
is
most
focused
on,
remained
unchanged
in
June
at
2.9%.
The
lack
of
change
here
month
on
month
would
suggest
that
the
downward
move
in
headline
inflation
was
mainly
driven
by
changes
in
the
prices
of
food
and
fuel,
which
we
know
to
be
volatile,”
he
added.
European
stock
markets
showed
a
mixed
picture
after
the
inflation
data
release,
with
Germany’s
DAX
down
0.9%,
and
France’s
CAC40
up
1.1%,
a
day
after
the
first
round
of
voting
in
national
elections.
Eurozone
bond
yields
didn’t
move
by
much
after
the
data
release:
Germany’s
10-year
yield
dipped
to
2.6%
and
France’s
10-year
yield
is
up
marginally
to
3.3%,
according
to
MarketWatch.
How
Many
ECB
Rate
Cuts
Will
Follow?
Today’s
inflation
reading
is
unlikely
to
change
the
prediction
for
two
rate
cuts
from
the
European
Central
Bank
this
year,
Michael
Field
says.
“With
the
ECB
enacting
its
first
rate
cut
last
month,
all
eyes
are
on
inflation
numbers
to
ascertain
how
many
more
rate
cuts
will
follow
this
year.
Current
economists’
forecasts
are
pointing
to
two.”
At
the
June
6
ECB
press
conference,
ECB
president
Christine
Lagarde
said
that
ECB
monetary
policy
will
remain
highly
data
dependent
and
that
she
is
not
committing
to
“a
particular
rate
path”.
The
central
bank
also
revised
inflation
forecasts
at
the
June
6
meeting;
it
sees
headline
inflation
averaging
2.5%
in
2024,
2.2%
in
2025
and
1.9%
in
2026.
For
core
inflation,
the
ECB
predicts
an
average
rate
of
2.8%
in
2024,
2.2%
in
2025
and
2.0%
in
2026.
Economic
growth
is
expected
to
pick
up
to
0.9%
in
2024,
1.4%
in
2025
and
1.6%
in
2026,
the
ECB
said
on
June
6.
The
next
ECB
monetary
policy
meeting
will
take
place
on
July
18.
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