Eurozone Inflation Slows as ECB Turns More Hawkish

Euro-area inflation slowed in June even as underlying price pressures picked up, backing the European Central Bank’s call for a prudent approach toward policy normalization.

Consumer prices rose an annual 1.3 percent in June — more than economists predicted — after increasing 1.4 percent the previous month, according to a flash reading by Eurostat on Friday. The core rate, which strips out volatile components such as energy and food, increased to 1.1 percent from 0.9 percent in May, also exceeding estimates.

The pickup in underlying inflation is encouraging for ECB President Mario Draghi and his fellow Governing Council members who want to see proof that price growth can be sustained at their goal of below but close to 2 percent without central-bank support. So far, the strengthening recovery and economic confidence at the highest level in a decade have only had a muted effect — the main reason why policy makers insist that an exit from unconventional measures must be gradual, if not very gradual.

Bloomberg

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