Eurozone Inflation Falls Again
Inflation across the 19-country eurozone held up better than anticipated in the face of waning energy prices, a sign that the region's economic recovery is reverberating across the single currency bloc, official figures showed Friday, according to the USA Today.
In its first estimate of inflation for June, Eurostat, the European Union's statistics agency, found that consumer prices rose by an annual 1.3%, down slightly from 1.4% the month before.
Though the rate has not been lower since December, the decline was more modest than financial markets had anticipated. That was likely due to the fact that the core inflation rate, which strips out the volatile items of food, alcohol, energy and tobacco such as energy, rose to 1.1% in the year to June from 0.9%.
The increase in the core rate is a further sign that many prices are being pushed up by higher wages as unemployment across the region steadily falls and economic growth improves.
A run of economic data recently has raised hopes that the eurozone economy is gaining momentum, fueling speculation that the European Central Bank may start reining in its stimulus sooner than predicted. Earlier this week, ECB President Mario Draghi spoke of a "firming and broadening" recovery, words that investors interpreted as a move to lay the groundwork for a change in policy. As well as slashing interest rates, including its main one to zero, the ECB has been buying bonds — currently about $68 billion per month — to keep market interest rates down and encourage lending across the economy.
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