Euro zone consumer price inflation dropped to 3 per cent year-on-year in June, easing back after hitting an eight-year high of 3.4 per cent in May, Eurostat said today.
On a month-on-month basis, consumer prices rose by 0.1 per cent in June in the 12-nation euro zone, the European Union's statistical agency said.
The data, issued on the eve of a meeting of the European Central Bank's policy-making council, confirmed hopes for an easing of the pressure on inflation, which has remained obstinately above the ECB's 2 per cent medium-term ceiling.
Ms Sharda Dean, an economist at Merrill Lynch in London, said the data looks good and is better than expected. "You've got a better rounding effect than people had anticipated. It was looking like it wouldhave been 0.2 per cent on the month and 3.1 per cent on the year, but it's come out lower."
The closely-watched core inflation rate in the euro zone, excluding energy, food, alcohol and tobacco, was unchanged at 2.1 per cent year-on-year in June, Eurostat said.
This was slightly above the consensus forecast of a 2.0 per cent rise.
High inflation restricts the ECB's room for manoeuvre in cutting interest rates at a time when the world economy is slowing.
The ECB has kept its benchmark rate unchanged at 4.50 per cent since its quarter-point cut on May 10th.
ECB President Mr Wim Duisenberg has said that inflation should fall below two per cent in 2002 provided there are no unexpected shocks.
The data showed an easing in energy price rises, which have pushed up inflation in recent months. The rise in the energy component dipped to 5.5 per cent in June from 8.6 per cent in May, it said.
For the 15-nation EU as a whole, annual inflation dipped to 2.8 per cent in June from 3.1 per cent in May, Eurostat said.
In June, the highest annual rises were in the Netherlands (5.0 per cent), Portugal (4.6 per cent) and Greece (4.5 per cent). Ireland recorded a harmonised inflation rate of 4.3 per cent. The lowest rates were in Britain (1.7 per cent), France and Denmark (both 2.2 per cent)