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Eurozone inflation falls in June

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Eurozone inflation fell in June driven by a reduction in oil price rises, show new figures published today.

Inflation in the 19 countries sharing the euro inched down to 1.9 per cent in June from two per cent in May, according to Eurostat, the statistical office of the European Union.

However, analysts have warned that one-off statistical factors may be yielding misleading estimates of inflation in the Eurozone area.

Willem Sels, chief investment officer, private banking and wealth management at HSBC, says: “What’s interesting in today’s reading is that inflation did not accelerate further from May to June.”

“This is in part because oil price inflation has started to drop, because a year-on-year comparison with rising oil prices last June mechanically reduces the figure.“

Read more: Bank expects inflation to breach target and shoot above three per cent

The reading means the European Central Bank has achieved its inflation target of “below but close to two per cent”. According to the latest UK CPI, prices rose 2.1 per cent annually in May, breaching The Bank of England’s two per cent target.

Neil Birrell, chief investment officer at Premier Miton, says: “There is no reason that inflation will not be a notable issue in Europe in the coming months, just as it is everywhere else, as the economy opens up and activity increases.”

“The ECB will be keeping a close eye on it, along with all the other central banks” he added.

Read more: UK inflation jumps to 2.1 per cent in May as clothing and fuel prices rise