Eurozone annual inflation slows to 5.5%
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Annual inflation in 20 eurozone countries slowed to 5.5% in June after 6.1% in May and 7% in April, follows from the preliminary estimates Eurostat.
Growth in prices for food, alcohol and tobacco slowed to 11.7% after 12.5% a month earlier. At the same time, energy prices are getting cheaper for the second month in a row, accelerating the decline: their prices fell by 5.3% compared with a 1.8% drop in May. Prices for non-energy manufactured goods rose 5.5% from 5.8% in May, and prices for services rose 5.4% from 5.0% last month.
Core inflation (an indicator that does not take into account energy and food prices. – Vedomosti) accelerated again after two months of decline, reaching 5.4% after 5.3% in May.
Among the countries for which the agency provides preliminary data, the highest inflation was recorded in Slovakia (11.3%), Estonia (9.%) and Croatia (8.3%). The lowest price growth was shown by Luxembourg (1%), Belgium and Spain (1.6%), as well as Greece and Cyprus (2.7%).
15 June European Central Bank (ECB) raised for the eighth time in a row, the key rate – by 25 bp. up to 4%. The regulator expects headline inflation in the eurozone at the end of the year at 5.4%, in 2024 – 3%, in 2025 – 2.2%. Economic growth forecasts for this and next year were lowered from 1.1% to 0.9% and from 1.6% to 1.5%, respectively. In 2025, an increase of 1.6% is expected. According to the forecast of the European Commission (EC), eurozone GDP in 2023 will increase by 1.1%. In 2024, the authorities expect growth of 1.6%.
The eurozone economy shrank by 0.1% in 2023 Q1. On June 8, European Commission spokeswoman Werle Nyts confirmed the start of a recession. The decline in collective GDP in the euro area is the second quarter in a row. Similar dynamics was recorded in the fourth quarter of 2022. In mid-May, the EC reported a significant increase in risks for the EU economy. The first and key risk is an increase in core inflation, the second is the development of a banking crisis, and the third is a new round of price rallies in the energy markets.
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