Eurozone inflation rises with the oil price

Energy prices cause slight rise in inflation

According to preliminary data from Eurostat, the inflation rate rose to 2.0% in June after falling to 1.9% in the previous month. The inflation rate excluding energy, food, alcohol and tobacco (core rate) remained at 2.3%, as in the previous month. Both figures are in line with the consensus expectations.

The slight rise in the inflation rate is mainly due to the temporary increase in oil prices in June. The conflict between Israel and Iran caused oil prices to jump temporarily by more than 10%. As a result, the year-on-year rate for energy prices also rose to -2.7% (from -3.6% in May). As oil prices fell again at the end of June, the inflation rate could slip back below the ECB's target of 2% in the coming months. The year-on-year rates for other components of inflation hardly changed compared with May. The year-on-year rate for important service prices, for example, rose slightly to 3.3% (from 3.2%).

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