By Ed Frankl
Cooling energy prices helped push eurozone inflation lower in June, increasing the likelihood the European Central Bank will refrain from raising its key interest rate for a second meeting in a row later this month.
Inflation in the 21-nation currency area fell to 2.8% from 3.2% in May, the first decline since January, the European Union's statistics agency Eurostat said Wednesday. A consensus of economists polled late last week by The Wall Street Journal expected consumer-price growth at 3.0%.
Energy prices were 1.7% cheaper in June than in May, the data showed as oil prices declined throughout the month after tensions in the Middle East eased. But services inflation also cooled, suggesting that energy costs aren't passing through significantly into the other types of price pressures.
The print suggests the ECB won't rush into another rate hike, allowing policymakers to wait for fresh macroeconomic forecasts at its meeting in September, when the impact of the Iran war on supply infrastructure could become clearer.
ECB rate setters have in recent weeks been balancing the discomfort of inflation still above the bank's 2% target alongside signs that the impact of the surge in energy prices is softening. Oil prices in the last week returned to pre-war levels, after the tentative deal announced between the U.S. and Iran to halt fighting.
"Granted, the outcome of the July meeting remains hostage to energy prices, but at this rate it would take a surge in oil prices for the governing council to raise interest rates later this month," Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics said in a note to clients ahead of the inflation print.
Write to Ed Frankl at edward.frankl@wsj.com