Eurozone Inflation Eases to 2.8% as ECB Weighs Whether to Pause

Euro area annual inflation eased to 2.8% in June from 3.2% in May, according to final figures from the European Union's statistics office, marking the first decline since prices began accelerating at the start of the year after the conflict in the Middle East disrupted energy supplies. While inflation remains above the European Central Bank's 2% target, the details of the release leaned toward a pause in rate rises. Core inflation, which strips out energy, food, alcohol and tobacco, slowed to 2.4% from 2.6%, energy inflation cooled to 8.5% from 10.8%, and services inflation eased to 3.2% from 3.5%, with headline rates falling in the majority of member states. Among the bloc's largest economies, Germany stood at 2.4%, France at 2.0%, Italy at 3.0% and Spain at 3.6%. The moderation follows the ECB's decision at its June meeting to raise its deposit rate by a quarter point to 2.25%, its first increase in nearly three years, as policymakers responded to the energy-driven price surge. The cooler June reading gives the Governing Council room to assess whether that move should be followed by further tightening or a period of steady policy.