Eurozone inflation accelerated slightly to 2.0 per cent in June, in line with analyst forecasts and the European Central Bank鈥檚 target, official data showed on Tuesday.
Inflation in the single currency area rose from the 1.9 per cent recorded in May due to a slower decline in energy prices.
Core inflation, which strips out volatile energy, food, alcohol and tobacco prices and is a key indicator for the ECB, was stable at 2.3 per cent in May, also as predicted by economists for Bloomberg.
The bank expects eurozone inflation to be on target this year as US President Donald Trump鈥檚 tariff blitz exerts downward pressure on prices.
The June rise in inflation聽was due to energy costs falling at a slower pace of 2.7 per cent in June after a drop of 3.6 per cent in May, Eurostat said.
Food and drink price increases slowed slightly to 3.1 per cent in June, compared to 3.2 per cent in May.
Inflation has significantly fallen from its record peak of 10.6 per cent in October 2022 after Russia鈥檚 invasion of Ukraine sent energy prices sky-high.
With inflation under control, the ECB has shifted to cutting interest rates to boost the eurozone鈥檚 sluggish economic growth.
The ECB has cut interest rates eight times since June last year when it began lowering borrowing costs. The next rate-setting meeting is on July 24.
While it seems the 鈥榝ight against inflation has been largely won鈥�, according to Andrew Kenningham, chief Europe economist at Capital Economics, it leaves the bank 鈥榳ith a difficult decision whether to call a halt to its easing cycle鈥�.
Kenningham said it was 鈥榤ost likely鈥� the ECB would leave its key deposit rate unchanged at 2.0 per cent in July and make a final cut of 25 basis points in September.
Tuesday鈥檚 data also showed that consumer price rises in Germany, Europe鈥檚 biggest economy, slowed in June to 2.0 per cent in June from 2.1 per cent in May.
But in France, inflation accelerated to 0.8 per cent in June from 0.6 per cent in May.
The Frankfurt-based ECB, however, warned Monday of 鈥榥ew challenges鈥� 鈥� from trade tensions to artificial intelligence 鈥� that could make inflation more volatile.
鈥楾he inflation environment will remain uncertain and potentially more volatile... posing challenges for the conduct of monetary policy,鈥� the ECB said.
