-Eurozone annual inflation reaches ECB target
Last week, markets focused on annual inflation data in the Eurozone.
Euro area annual inflation is expected to reach 2 percent in June 2018, up from 1.9 percent in May 2018, according to a flash estimate from Eurostat, the statistical office of the European Union.
Out of the main components of euro area inflation, energy is expected to show the highest annual rate in June at 8 percent, compared with 6.1 percent in May. Food, alcohol & tobacco follow at 2.8 percent, compared with 2.5 percent in May, services are estimated at 1.3 percent, compared with 1.6 percent in May, and non-energy industrial goods at 0.4 percent, compared with 0.3 percent in May.
The ECB, which is responsible for managing monetary policy in the euro area, is targeting inflation in the region of just below but close 2 percent to maintain price stability in the region. As a result, the bank is implementing measures, including an asset purchase program, and a low-interest rate policy.
Furthermore, ECB President Mario Draghi recently declared four inflation criteria the ECB is looking for. These criteria consist of the need to have inflation return to 2 percent over the medium-term, with a convergence that is durable, self-sustained, and one which involves the entire region.
According to preliminary figures, annual inflation has met the ECB's inflation aim for the entire Euro area. However, experts warn that this increase could be temporary, as the rise in inflation is due to fluctuating energy prices.
The ECB Governing Council will meet in Frankfurt on July 26 after which Draghi will make an announcement of the bank’s interest rate decisions.
-The week ahead
Significant data is light this week in the Eurozone, but investors will follow the European Central Bank and global markets.
