Euro zone inflation drops less than expected

Euro zone inflation drops less than expected

In June, euro zone inflation went down, following more moderate energy price leaps, but the slowdown appeared to be less than expected by financial markets and the core measure of price surge the ECB keenly watches inched up more than expected.

According to the European Union's statistics office Eurostat, consumer prices in the 19 countries, sharing the common currency, tacked on 1.3% year-on-year in June, sliding from 1.4% in May and also 1.9% in April.

However, economists surveyed by Reuters had expected a much steeper sag to 1.2%. Additionally, they also expected inflation excluding energy and unprocessed food at 1%, the same outcome as in May.

In reality, in June core inflation surged to 1.2%, according to Eurostat data.

Meanwhile, the ECB is eager to keep headline inflation below, although close to 2% target over the medium term. Moreover, the EU’s key bank has been purchasing billions of euros worth of government bonds on the secondary market for the purpose of injecting cash into the economy and spurring faster surge.  

 

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