Inflation in the 19-nation eurozone softened slightly in June after expanding in May. Confirming its previous estimate, the European Union statistical office Eurostat announced the consumer prices in the eurozone rose by 0.2 percent year-on-year in June, while inflation recorded a 0.3 percent increase in May.
Core inflation, which excludes energy and unprocessed food prices, increased 0.8 percent in June compared to 0.9 percent in May.
According to Eurostat, restaurants and cafes, tobacco and rents had the biggest upward impact on the overall year-on-year inflation value in June. On the other hand, cheaper gas, heating oil and automotive fuel affected the index negatively. Energy costs fell 5.1 percent, while the drop was 4.8 percent in May.
The European Central Bank (ECB) aims to keep inflation below but close to 2 percent over the medium term. In order to achieve this, the ECB began a quantitative easing programme in March to stimulate the economy and avert the risk of deflation. Under this money-printing programme, the bank is buying government bonds and other assets to pump around €1 trillion into the economy. The programme is expected to last until September 2016.
In June, the inflation slowdown in Germany is considered to be a major reason for the weaker-than-expected inflation in the eurozone as a whole. Europe’s largest economy, Germany posted slower than expected inflation data in June with an decline of 0.1 percent on a monthly basis, while the year-on-year inflation is confirmed to rise 0.3 percent.