Euro zone inflation dips more than expected in June

Eurozone inflation eased last month far more than expected. It has further lowered pressure on the European Central Bank to raise interest rates again, to offset quick price growth. Overall inflation slowed to 2.8% in June from May's 3.2%, coming in well below forecasts of 3%. That's as food, energy and services inflation all slowed. A more closely watched figure on underlying prices, which strips out volatile food and fuel prices, also slowed to 2.4% from 2.6%. The June reading is still well above the ECB's 2% target. But the recent decline in oil prices on bets for a US-Iran peace deal has raised hopes that price pressures would ease from this point, and that broader damage from the energy price surge would remain limited. A host of policymakers have said there is no rush for the bank to follow up June's quarter-point rate hike with another move this month. They've said policymakers could afford some time to see how price pressures evolve. The ECB is especially worried the initial energy shock will start pulling up the price of other goods and services, eventually lifting wages as well. But such second-round price effects have yet to materialise, and wage pressures are also not accelerating, boosting the case for patience. Even if there is a pause in July, most economists think the ECB is likely to raise rates later in the year. This is because energy prices still remain far above pre-war levels, and the Middle East conflict could take yet another unexpected turn, keeping price expectations volatile.