Eurozone Inflation Eases to 2.8% in June as Energy Shock Fades

Consumer price inflation across the eurozone slowed to 2.8% in June from 3.2% in May, according to Eurostat's flash estimate, coming in below the 3.0% economists had expected and marking the lowest reading since February. Prices fell 0.1% over the month, the first monthly decline this year, as the spike unleashed by the conflict in the Middle East showed signs of running out of steam. Energy inflation eased sharply to 8.7% from 10.8%, while services inflation slowed to 3.2% and the closely watched core rate, which strips out energy and food, fell to 2.4% from 2.6%. All of the currency bloc's largest members reported cooler price growth: Germany's harmonised rate dropped to 2.4%, France's fell to 2.0% and Italy's edged down to 3.1%. The data reinforced expectations that the European Central Bank, which raised rates in June for the first time since 2023, will hold steady at its July meeting rather than tighten further. With the economy soft and a US-Iran truce lowering the risk of another oil shock, analysts see little pressure for aggressive action, though one more modest hike this year has not been ruled out.