Eurozone Inflation Eases Slightly in June, ECB Remains Cautious

Eurozone inflation showed a slight decrease in June, but the European Central Bank (ECB) is expected to maintain its cautious approach to interest rate cuts. Consumer prices rose by 2.5% compared to the previous year, down from 2.6% in May. However, core prices, which exclude energy and food, remained stable at 2.9%. The ECB remains concerned about rising service prices, particularly in areas such as restaurants, holidays, and healthcare. These increases are believed to be driven by wage hikes, prompting worries that they may continue until workers’ demands for higher pay cease. ECB Chief Economist Philip Lane stressed the need for more time to assess the situation, while ECB President Christine Lagarde emphasized the importance of vigilance. Despite these concerns, the eurozone’s services sector continued to grow in June, mitigating some of the worries surrounding the sluggish manufacturing sector.