Inflation in the Eurozone fell to 2.8% in June, easing pressure on the European Central Bank to raise interest rates.

Inflation in the Eurozone has significantly slowed, with consumer prices rising by just 2.8% in June compared to the same month last year, according to preliminary data from Eurostat. This marks a notable decline from May’s 3.2% rate, driven by a stabilization in global oil prices following the resolution of tensions in the Middle East. Economists had anticipated a smaller drop to 3.0%, making the latest figures a positive surprise.

Germany, the Eurozone’s largest economy, saw its inflation rate fall to 2.4% in June, down from 2.7% in May. Meanwhile, the highest inflation rates were recorded in Lithuania (5.5%), Bulgaria (5.3%), and Croatia (4.2%), while Malta (1.9%) and France and Estonia (2.0% each) experienced the lowest. Energy prices, which had surged during the Iran conflict, rose by 8.7% year-on-year in June, a significant drop from May’s 10.8%.

The European Central Bank (ECB) had raised interest rates in June for the first time in nearly three years to combat inflation, but the latest data may reduce the urgency for further hikes. ECB Governing Council member Alexander Demarco stated that the current oil price stabilization allows for a wait-and-see approach before making additional rate decisions. However, Bundesbank President Joachim Nagel cautioned that inflation remains too high and urged careful consideration of future monetary policy.