Euro zone price inflation stays low but stable in June

Euro zone inflation in June was flat, official data showed on Monday, easing immediate pressure on the European Central Bank to act again soon to tackle slow price rises.

The year-on-year June inflation rate in the 18 countries sharing the euro stood at 0.5 per cent for the second month in a row, the European Union's statistics office Eurostat said.

It was the ninth straight month that inflation remained within what European Central Bank president Mario Draghi has called a "danger zone" of below 1 per cent.

Prices of food, alcohol and tobacco fell by 0.2 per cent in June, while the prices of services rose by 1.3 per cent and energy costs were up by 0.1 per cent year-on-year, Eurostat data showed.

Core annual inflation - excluding energy, food, alcohol and tobacco - rose by 0.8 per cent year-on-year in June after a 0.7 per cent increase in May.

Earlier this month, the ECB reacted to vanishing price inflation with a raft of measures, including cutting the deposit rate below zero and offering long-term loans to banks aimed at boosting lending to business.

The ECB insists that there is no acute risk of outright deflation in the 9.6 trillion euro economy. Three countries, however, experienced deflation in May.

The ECB lowered its forecast for euro zone inflation in June, predicting that it would reach 1.4 per cent in 2016 - far off its target of below but close to 2 per cent.

The ECB's Governing Council meets again on Thursday.

Reuters