Headline Inflation Softest Since Jan '22, Core Up on Services

EUROZONE JUN FLASH CPI +0.3% M/M (= FCST); MAY 0.0% M/M

EUROZONE JUN FLASH CPI +5.5% Y/Y (FCST +5.6%); MAY +6.1% Y/Y

EUROZONE JUN FLASH CORE CPI +0.3% M/M, +5.4% Y/Y (FCST +5.5%); MAY +5.3% Y/Y

• Eurozone June HICP was 0.1pp below consensus estimates in the flash data cooling by 0.6pp to +5.5% y/y. This was the lowest since January 2022, before the inflationary effects of the Russia-Ukraine war.
• Prices accelerated by +0.3% m/m, after having stalled in May.
• Core also was 0.1pp lower than expected, however ticked up to +5.4% y/y (vs +5.3% in May). Stronger services inflation drove this increase, quickening from +5.0% y/y in May to +5.4% y/y in June. This uptick had largely been foreshadowed by yesterday's German data.
• Prices cooled across the remaining key categories, with food down 0.8pp at +11.7% y/y, energy down 3.8pp at a deflationary -5.6% y/y and non-energy industrial goods down 0.3pp at +5.5% y/y.
• On a country basis, annualised CPI rates were lower across all euro-area members barring unchanged in Croatia and an uptick in Germany. The latter saw base-effects of last summer's 9-euro ticket push services CPI up.
• Belgium, Spain and Luxembourg all posted inflation rates below the 2% ECB target threshold, yet the uptick in core CPI confirms the ECB's current hawkish stance, with markets looking for a very likely July hike.