-Howard Archer, an economist at IHS Global
Eurozone inflation remained flat at 0.5% in June, marking the ninth straight month of rate being in the danger zone and underscoring challenges faced by the ECB Head as he attempts to spur economic growth in the 18-nation region. Consumer prices rose 0.5% on year, unchanged from May's reading, according to flash estimates of Eurostat. The service sector was the only to report significant price growth, rising as much as 1.3%, whereas food, alcohol and tobacco prices fell 0.2%, while industrial goods remained unchanged. The ECB aims at achieving a 2% inflation goal and has embarked on fresh measures designed to spur inflation and bolster the stagnant European economy. Some economists are warning that persistently low inflation rate could lead to deflation, raising fears that consumers might spend even less as they would expect prices to fall in the coming months. Earlier in June the ECB became the first major central bank to implement negative interest rates to ensure money moves into the fragile Eurozone's economy. According to Bloomberg survey, the Eurozone economy will expand 0.3% in the second and third quarters, accelerating to 0.4% in the end of the year.
Separate data from the Eurozone showed that retail sales in Greece rose the most in more than two years in April, surging 7.3% on an annual basis. In Germany, Europe's powerhouse, retail sales inched higher 1.9% in May on year, but fell 0.6% compared to April's figure.
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