Eurozone inflation creeps up to 1.6 per cent - driven by food, alcohol and tobacco

Euro area inflation has risen to 1.6 per cent in the year to June 2013, from 1.4 per cent in the year to May (release). That's exactly the figure economists had been predicting.

Looking at the main components of euro area inflation, food, alcohol & tobacco is expected to have the highest annual rate in June (3.2%, stable compared with May), followed by energy (1.6% compared with -0.2% in May), services (1.4% compared with 1.5% in May) and non-energy industrial goods (0.7% compared with 0.8% in May).

Jonathan Loynes, chief European economist at Capital Economics:

The latest euro-zone inflation and labour market figures inject a slight note of caution after the recent improvement in some of the region’s activity indicators. Admittedly, June’s rise in inflation from 1.4% to 1.6% was driven entirely by energy base effects. Core inflation – which is now included in the flash release – remained very subdued at just 1.2% and core goods inflation slipped to just 0.7%. Headline inflation should therefore fall further over the coming months, but this is a reflection of economic weakness and won’t necessarily prompt cautious consumers to up their spending.