Eurozone Inflation Slightly Eased in June, ECB Retains Greater Flexibility

Jin10 Data reported on July 17 that inflation in the Eurozone slightly cooled in June, with data matching preliminary estimates. Overall monthly inflation recorded -0.1%, primarily driven by a decline in energy price inflation (-1.8%). From the breakdown data, further cooling in energy prices led to a continued decline in overall year-on-year inflation, with energy price inflation dropping from 10.8% in May to 8.5% in June. Meanwhile, food price inflation and service price inflation also eased further. Food price inflation fell from 1.9% in May to 1.5% in June, while service price inflation decreased from 3.5% to 3.2%. Overall, this contributed to a further decline in core inflation. In summary, the inflation situation in June did not deteriorate, allowing the European Central Bank (ECB) to maintain greater policy flexibility during the summer, giving it more time to observe before deciding on the next monetary policy action. The current risk lies in renewed tensions in the Middle East, which could trigger another round of increases in oil and gas prices, thereby heightening price pressures during the summer. In the longer term, this also raises the risk of potential "second-round effects" in the future.