Euro zone inflation eased last month but underlying readings remained stubbornly high, Eurostat said on Wednesday, confirming preliminary data that raised worries at the European Central Bank about the persistence of price pressures.
Consumer inflation in the 20 nations sharing the euro eased to 6.9% from 8.5%, primarily on a rapid fall in energy costs as natural gas prices keep declining after their surge a year ago on Russia's invasion of Ukraine.
Indeed, excluding unprocessed food and fuel, prices accelerated to 7.5% from 7.4% while an even narrower inflation measure that also strips out alcohol and tobacco picked up to 5.7% from 5.6%, in line with preliminary data. For now, markets are leaning towards the smaller move but investors still see a one in three chance that the ECB goes for a bigger increase.
The ECB's main worry is that services inflation, now at 5.1%, is simply too quick and could be signalling that wages are becoming a key problem as services prices are predominantly determined by labour costs.
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