Eurozone Inflation Falls for Second Straight Month in June

By Paul Hannon Features Dow Jones Newswires

The eurozone's annual rate of inflation fell for the second straight month in June to its lowest level in 2017, in a setback for the European Central Bank as its stimulus programs enter a fourth year.

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The European Union's statistics agency said Friday that consumer prices in the currency area were 1.3% higher than a year earlier, compared with 1.4% in May.

That edged the annual rate of inflation further away from the ECB's target of just below 2%, a goal it has spent three years trying to reach using a variety of stimulus measures.

June's inflation reading was the lowest so far in 2017, largely reflecting a slowing of energy prices from earlier in the year. That serves as a reminder of how difficult it has been for the central bank to boost consumer prices since it first resorted to extraordinary measures by taking one of its key interest rates into negative territory in June 2014.

"The relationship between growth and inflation may have been loosened somewhat by a number of structural changes--technological advances, globalization and the impact of structural reforms-- but it has not been eliminated," said Luigi Speranza, an economist at BNP Paribas.

"If, as the ECB expects, the output gap continues to close over time, inflation should converge gradually towards 2%--in other words, the current period of subdued inflation is temporary," he added.

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-Write to Paul Hannon at paul.hannon@wsj.com

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(END) Dow Jones Newswires

June 30, 2017 05:14 ET (09:14 GMT)