The situation in Europe is not as gloomy as most people think. The EU countries managed to survive winter, found new gas and oil suppliers, and slackened inflation. Eurostat reported that consumer price growth slowed down to the lowest level since January 2022. According to the official data, in June, inflation totaled 5.5% per annum.
Inflation showed a considerable drop compared to the reading of 6.1% recorded in May and reached a new low since January 2022. The data turned out to be better than expected. Economists had foreseen a decline to 5.6%. The slackening was mainly driven by cheaper energy. Thus, in June, the average energy price dropped by 5.6% compared to the same period in 2022. In May, it slid by just 1.8%. Meanwhile, the growth in prices of food, alcohol, and tobacco totaled 11.7%. Although it is still a very high reading, the indicator slumped from 12.5% in May. Core inflation, which excludes prices of food and energy, accelerated to 5.4% from 5.3% in May. It is a general indicator that does not reflect the situation in a particular country. For example, in Croatia, inflation remained unchanged, while in Spain, Belgium, and Luxembourg, inflation dropped below the target level of 2% for the first time in more than a year.
In June, the European Central Bank provided a new inflation outlook. Thus, in 2023, the eurozone inflation will total 5.4%, in 2024 – 3%, and in 2025, the indicator may approach the target level of 2.2%.
