Inflation in the euro zone extended its decline in June as the cost of fuel tumbled, more than offsetting an acceleration in prices for services, a preliminary reading showed on Friday.
Inflation in the 20 countries that share the euro fell to 5.5% this month from 6.1% in May, chalking up its seventh decline in the last eight months, with"Inflation is still high and sticky but momentum is moderating," said Frederik Ducrozet, head of macroeconomic research at Pictet Wealth Management.
But "core" inflation excluding energy and food, which ECB policymakers see as a better gauge of the underlying trend, only edged lower, to 6.8% from 6.9% - far from the sustained drop the central bank wants to see. "The core rate is likely to remain well above the 5% mark in the next months which will further rate hikes by the ECB," said Ulrike Kastens, an economist for Europe at DWS.
Services were the only category where price growth picked up - to 5.4% from 5.0% - demonstrating consumers' continued resilience in the face of higher borrowing costs, thanks largely to a strong labour market. The euro zone unemployment rate remained at an historic low of 6.5% in May, Eurostat reported separately on Friday.interest rates to their highest level in 22 years this month as it predicted inflation would stay above its 2% target through the end of 2025.this week that the central bank was unlikely to call a peak in rates any time soon, and most policymakers see a further hike in September as likely.
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