Harmonized inflation increases to over one-year high in June

Latest reading: Harmonized inflation rose to 4.6% in June, from May’s 4.3%, marking the highest inflation rate since December 2023 and remaining the highest in the Euro area. Looking at the details of the release, prices for food, transportation and accommodation rose at a faster pace. Meanwhile, price growth for recreation plus housing and utilities waned. The trend pointed up slightly, with annual average harmonized inflation coming in at 3.7% in June (May: 3.5%). Meanwhile, consumer price inflation ticked up to 4.3% in June from May’s 4.1%. Lastly, harmonized consumer prices rose 0.27% in June over the previous month, moderating from May's 0.52% rise.

Panelist insight: Commeting on the outlook, Marian Kocis, analyst at Erste Bank, stated: “A gradual pass-through of higher VAT and rising costs, such as the financial transactions tax, into consumer prices is still expected. A key factor influencing inflation developments this year is the government’s reintroduction of the energy price cap, which has helped bring inflation down, albeit at the cost of complicating fiscal consolidation efforts. We expect that inflation reached its peak for the year in June. In the second half of the year, we anticipate a moderate slowdown in the year-on-year pace of price growth, although inflation is likely to remain near 4% during the summer months.”

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