• June final CPI +2.8% vs +2.8% y/y prelim
• Prior +3.2%
• June final core CPI +2.4% vs +2.4% y/y prelim
• Prior +2.6%

No change to the initial estimates as euro area inflation cools a little in June. The monthly estimate for headline inflation even records a negative reading (-0.1%), largely thanks to a drop in energy price inflation (-1.8%).

As for the overall breakdown, headline annual inflation also comes in lower amid a further cooling in energy prices. That is seen down to 8.5% in June from 10.8% in May.

At the same time though, there is a further drop in food price inflation and also services inflation. The former fell to 1.5% in June from 1.9% in May with the latter falling to 3.2% in June from 3.5% in May. Overall, that contributed to the softer core price estimate.

And when putting all of that together, it means that inflation developments are not quite taking a turn for the worse last month. As such, that affords the ECB some added flexibility in waiting out the summer before deciding again on their next course of action on policy setting.

The risk now is that renewed tensions in the Middle East conflict will spark another resurgence in oil and gas prices, which will in turn pull up price pressures into the summer. And in the bigger picture, that just increases the risks of potential second round effects down the road.

This article was written by Justin Low at investinglive.com.