Consumer prices slip to 2.5% but the core rate stays high, prompting little belief in further cuts in borrowing costs. Analysts here say the Euro area’s consumer inflation rate moderated to +2.5%yoy in Jun-24 (May-24: +2.6%yoy), conforms to market expectations.
Food inflation rate eased to +2.5%yoy, the lowest since Sep-21. Energy price inched up by +0.2%yoy (May-24: +0.3%yoy). Excluding volatile price items, core inflation rate was unchanged at +2.9%yoy, missed market projection of +2.8%yoy.
Eurozone inflation
On a month-on-month basis, overall price growth steadied at +0.2%mom while core inflation rose by +0.3%mom. As of 1HCY24, average headline inflation rate and core inflation rate are +2.6% and +3.0% respectively.
These figures are slightly lower but in tandem with ECB’s forecast trajectory, +2.5% for headline and +2.8% for core in 2024.
“Moving forward, we foresee the ECB will keep its interest rate status quo for Jul-24 policy rate. However, the central bank may consider another cut in contingent upon core inflation rate registering lower than ECB expected in 2HCY24,” says MIDF.
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