Euro-Area Consumer Prices Increased 1.6% in June on Energy Costs

Euro-area consumer prices increased 1.6 percent in June, as energy rebounded from two months of declines.

Annual consumer-price growth quickened to 1.6 percent from 1.4 percent in May, in line with an initial estimate on July 1, the European Union’s statistics office in Luxembourg said today. In the month, prices rose 0.1 percent, while the annual core inflation rate, excluding volatile costs such as energy, alcohol and tobacco, was 1.2 percent.

European Central Bank President Mario Draghi earlier this month took what he called an “unprecedented” step and told investors that interest rates in the 17-nation euro area would stay low as the economy struggles to emerge from recession, lending is weak and inflation pressures remain subdued. The ECB’s benchmark rate is at a record low 0.5 percent.

The euro-area economy, which has contracted for six straight quarters, probably stagnated in the three months through June and will return to growth in the third quarter, according to a Bloomberg News survey of economists. The ECB sees consumer prices rising 1.4 percent this year.

Energy costs increased 1.6 percent compared with a drop of 0.2 percent in May, according to today’s release. The cost of food, alcohol and tobacco rose 3.2 percent, the same rate as in May, while the cost of services increased 1.4 percent.