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Eurozone inflation 0.1% in June - first rise in five months

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Eurozone inflation 0.1% in June - first rise in five months

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Inflation is back for the eurozone.

Consumer prices rose in June for the first time since January in the 19 countries that use the euro.

They were up by 0.1 percent compared with June last year.

In May consumer prices were down by 0.1 percent.

So-called core inflation was unchanged at 0.8 percent.

That calculation does not include unprocessed food and energy, the prices of which tend to be more volatile.

The news suggests the European Central Bank’s efforts to fight deflation are beginning to have some effect, though price growth is still way short of the ECB’s target of around 2 percent.

Another inflation indicator, which excludes energy, food, alcohol and tobacco products, rose to 0.9 percent from 0.8 percent in May, another encouraging sign for the ECB.

Energy prices fell in June, but the decline slowed to 6.5 percent from the 8.1 drop recorded in May.

Prices for services, the biggest component of the eurozone economy, rose 1.1 percent year-on-year, the strongest increase among the main components of the inflation index. They rose 1.0 percent in May.

ECB ‘wait-and-see’ stance over Brexit

At the same time the ECB has indicated it is in no rush to lower interest rates and add more economic stimulus in response to Britain’s vote to leave the European Union.

Officials say it is taking a wait-and-see approach .. comforted by the financial markets reaction being calmer than feared.

“This is a political problem not a monetary phenomenon,” one ECB source told the Reuters news agency. “We could act, we have the tools, but that would not solve the broader problem and for now, every estimate about the actual impact of Brexit is nothing but guesswork.”

EC on standby over market turbulence

The European Commission stands ready to cooperate with central banks and other authorities to quell any market turbulence that may follow the Brexit vote in the coming weeks and months, the vice president of the EU executive said on Thursday.

Valdis Dombrovskis, who is in charge of the euro at the European Commission, gave that assurance at a conference in Brussels.

He said: “The European Commission, the European Central Bank, other central banks and all relevant authorities continue to cooperate closely to ensure an appropriate response to whatever turbulence there might be in markets.”

He added that at the moment it is too early to predict Brexit’s economic impact on the eurozone.

Dombrovskis will be responsible for financial services at the European Commission from mid-July after the resignation last week of the British commissioner Jonathan Hill, following Brexit.

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