FX.co ★ Eurozone inflation unexpectedly cools thanks to falling oil prices

Eurozone inflation unexpectedly slowed to 2.8% year-on-year in June, down from 3.2% in May. According to Bloomberg, this figure is significantly below analysts’ forecasts, which anticipated a decrease to just 3.0%. The primary catalyst for such a sharp deceleration in price growth has been a rapid drop in global oil prices, driven by easing geopolitical tensions and improvements in the Middle East situation. Core inflation, excluding volatile components, also showed a positive shift, falling to 2.4% instead of the expected 2.6%.

In several European countries, inflation rates have approached the European Central Bank’s long-term target. Notably, annual inflation in France has already reached the desired level of 2%. In this context, leading financial experts have begun to quickly reassess their expectations regarding the ECB’s future actions. The June macroeconomic data compels analysts to lower the likelihood of another interest rate hike and adjust previous forecasts regarding the overall duration of the current monetary tightening cycle.

Despite these upbeat figures, economists warn that it is too early to declare victory over rising prices, as inflation could temporarily accelerate due to various secondary factors. In addition, consumer sentiment within the currency bloc remains complex. The ECB previously reported that median expectations for inflation among citizens over the last 12 months were 4% in June, the highest level since July 2024. This indicates a persistent gap between official statistics and the real sentiments of the population.