Euro zone returns to inflation in June, at modest 0.1 pct rate

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The euro zone returned to inflation in June after four months of falling or stagnant consumer prices, principally due to a marked slowdown in the decline of energy prices, according to a flash estimate from the European Union's statistics agency.

Eurostat said on Thursday that inflation in the 19 countries sharing the euro rose to 0.1 percent year-on-year in June from -0.1 percent in May. The rate was above the average expectation of economists polled by Reuters of a zero reading for June.

Core inflation, which according to the European Central Bank's definition excludes the most volatile components of unprocessed food and energy, was unchanged at 0.8 percent, in line with market expectations.

Excluding energy, food, alcohol and tobacco products, the inflation rate increased to 0.9 percent from 0.8 percent in May.

Energy prices continued to be lower year-on-year but the decline has eased. In June they were down 6.5 percent, from the 8.1 drop recorded in May.

Prices in the services sector, the largest in the euro zone economy, rose 1.1 percent year-on-year, the strongest increase among the main components of the inflation index. That compared with a 1.0 percent rise in May.

Eurostat's flash estimate for the month does not include a monthly calculation.

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