Eurozone inflation inches higher to 2%, hitting ECB target

(Sharecast News) - Inflation across the eurozone picked up slightly in June to meet the European Central Bank's 2% target, according to data out on Tuesday from Eurostat. The year-on-year change in consumer prices accelerated to 2.0% last month, up from 1.9% in May and in line with economists' expectations. Over the month of June, prices were up 0.3% following no change the month before.

The increase in the annual rate was partly attributable to a pickup in services inflation to 3.3% from 3.2%, while energy price deflation eased significantly to -2.7% from -3.6%.

Meanwhile, food, alcohol and tobacco price inflation slowed to 3.1% from 3.2% and non-energy industrial goods inflation eased to 0.5% from 0.6%.

Excluding volatile items like energy, food, alcohol and tobacco, core inflation held steady at 2.3% for the second straight month, after dropping from 2.7% in April.

Joshua Mahony, chief market analyst at Scope Markets, said that the ECB is likely "on the lookout for any effects from the US-eurozone trade friction", with Donald Trump's tariff war expected to increase inflationary pressures worldwide.

However, he added: "Notably, we have seen China reroute many of its products into markets such as Europe, providing potential price competition that could keep a lid on inflation."