Financial News: Eurozone Inflation Hits ECB Target

Eurozone Inflation Hits ECB Target

(RTTNews) - Euro area inflation rose slightly to hit the European Central Bank's 2 percent target in June on slower fall in energy prices and the rise in services inflation, flash estimate from Eurostat showed on Tuesday.

Annual inflation climbed to 2.0 percent in June from 1.9 percent in May. The rate reached the inflation target and also matched economists' expectations.

Meanwhile, core inflation that excludes prices of energy and food held steady at 2.3 percent in June, as expected.

Month-on-month, the harmonized index of consumer prices gained 0.3 percent. Final data is due on July 17.

ING economist Bert Colijn said inflationary pressures have clearly weakened as wage growth is coming down and economic performance remains sluggish, keeping the door open to another rate cut in autumn.

Last month, the ECB lowered its interest rates by 25 basis points and the staff trimmed the euro area inflation projections for this year and next citing prospects of lower energy prices and a stronger euro going forward.

The inflation forecast for this year and next were trimmed by 0.3 percentage points to 2.0 percent and 1.6 percent, respectively.

Data today showed that among components of HICP, services inflation rose to 3.3 percent from 3.2 percent in May, followed by prices of food, alcohol & tobacco with an increase of 3.1 percent.

Non-energy industrial goods posted a growth of 0.5 percent, while energy prices were down 2.7 percent.

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