Key facts
- Eurozone inflation slowed more than expected in June.
- German inflation fell to 2.4% in June.
- French inflation slowed to 1.8% year-on-year in June.
- French inflation was down from 2.4% in May.
- French inflation missed analyst forecasts of 2.1%.
- Slower energy price growth drove down French inflation.
- German retail sales showed a 1.1% monthly increase in May.
- German retail sales also showed a 1.6% monthly decline in May.
- German unemployment fell by 1,000 in June.
- Economists had predicted a 7,000 increase in German unemployment.
- The German seasonally adjusted jobless rate was 6.3%.
- 2.984 million people were unemployed in Germany.
Inflation across major euro zone economies, including Germany, France, and Italy, slowed more than anticipated in June. This easing of price pressures reduces the immediate need for the European Central Bank to raise interest rates. German inflation specifically eased to 2.4% in June, falling below forecasts. French consumer prices rose 1.8% year-on-year in June, a significant slowdown from May's 2.4% and below the 2.1% expected by analysts. The decrease in French inflation was primarily driven by slower energy price growth, with services and food inflation also easing.
In Germany, retail sales data for May presented mixed signals. There was a surprising 1.1% monthly increase reported, but this was contrasted by a 1.6% monthly decline also noted, indicating uncertainty in consumer spending trends. In a separate development, Germany's unemployment figure decreased by 1,000 in June, defying economists' predictions of a 7,000 increase. The seasonally adjusted jobless rate held steady at 6.3%, with a total of 2.984 million people unemployed.
Across the Atlantic, economists suggest that upcoming methodological changes to how the Bureau of Economic Analysis calculates prices for certain services could lead to a downward revision of the May core Personal Consumption Expenditures (PCE) inflation rate in the United States. Goldman Sachs estimates that these changes might trim the year-on-year increase to 3.2% from the previously reported 3.4%.