Underlying price pressures in the euro zone eased in June after hitting five-and-a half year highs in April but remained high to support expectations of further European Central Bank rate hikes, an index showed today.
Data from the Economic Cycle Research Institute (ECRI), which designs indices aimed at predicting business cycles, showed its Eurozone Future Inflation Gauge (EZFIG) inched lower to 104.6 in June from 104.7 in May.
Latest official data show inflation in the 12-nation euro bloc was running at 2.5 per cent in July, the same rate as in June, and well above the ECB's target ceiling of 2 per cent.
Yesterday, the ECB raised its benchmark refi rate to 3.0 from 2.75 per cent as widely expected and signalled more hikes to come to rein in inflationary pressures.
The ECRI gauge aims to anticipate cyclical swings in the region's inflation rate and changes in official interest rate policy by measuring underlying inflationary pressures, rather than actual inflation rates.
The gauge for Germany rose to 90.8 in June from 90.3 in May, holding close to five-and-a-half year highs.
Inflationary moves in measures of employment conditions, money supply and orders in Germany were partly offset by disinflationary moves in measures of materials prices and loans, ECRI said.