Inflation rise not to hinder ECB's rate cuts

Eurozone consumer price growth remains moderate, despite some acceleration in France and Spain. In June, inflation in France inched up to 0.8% year-on-year from 0.6% in May, while in Spain it reached 2.2%, in line with expert expectations. According to Bloomberg, these figures indicate a sustained easing in price pressures across the eurozone, allowing the European Central Bank (ECB) to continue its rate-cutting policy.

As reported on Friday, the uptick in inflation in France was driven by a faster rise in service costs, while prices for industrial goods and energy either fell or increased just slightly. The Governor of the Bank of France, Francois Villeroy de Galhau, described the situation as encouraging and consistent with the regulator's forecasts. However, he noted that the country's economic growth is losing momentum due to an unstable political situation and government spending cuts.

Bloomberg Economics estimates that the overall inflation rate in the eurozone could be around 2% in June, with weak dynamics expected to persist through the end of the year.