Eurozone inflation eases, and trade surplus shrinks

ECB attributes expected inflation to one-off factors during the projected global recovery from the pandemic

The ECB predicts that borrowing costs are set to stay ultra low for years to come. 

Eurozone inflation slowed in June after a steady acceleration in the first months of 2021, official data has confirmed, while the bloc's trade surplus shrank in May due to a decline of exports.

The EU’s statistics office Eurostat said consumer prices in the 19-country single-currency bloc rose 1.9% in June on the year, slightly less than the 2% increase in May, in the first slowdown since last September.

The final data confirmed an initial estimate released by Eurostat on June 30. Here, the CSO recently said consumer prices rose 1.6%, year-on-year, in June.

ECB predicts inflation will rise

The European Central Bank expects inflation to rise later in the year, but it has made it clear that the acceleration is mainly due to one-off factors as the global economy recovers from the worst phase of the coronavirus pandemic. Therefore, no tightening is on the cards and borrowing costs are set to stay ultra-low for years to come.

Energy prices contributed 1.16 percentage points to the overall 1.9% inflation.

In a separate release, Eurostat said that the eurozone trade balance in goods with the rest of the world recorded a smaller surplus in May than in April.

In May, the bloc exported goods worth €188.2bn and imported €180.7bn of goods, for a surplus of €7.5bn.

• Reuters and Irish Examiner