Inflation across the European Union rose to 2.3% in June 2025, up from 2.2% in May, while the euro-area inflation rate hit 2.0%, slightly higher than May’s 1.9%, according to Eurostat. This uptick in headline inflation was moderated by a fall in energy prices, which contributed –0.25 percentage points to the euro‑area’s inflation rate. Conversely, prices of non-energy industrial goods added 0.13 percentage points.
Among EU member states, inflation trends varied significantly. Romania recorded the highest annual inflation at 5.8%, followed by Estonia at 5.2%, while Cyprus had the lowest rate at 0.5%. France, with 0.9%, and Ireland, at 1.6%, also remained at the lower end of the spectrum.
Core inflation—stripping out volatile food and energy costs—stayed steady at 2.3% in the euro area, in line with ECB targets and forecasts. Services inflation continued to show persistence, climbing to 3.
3%, up from May’s 3.2%, signaling underlying price pressures in the domestic economy.
The slight increase in headline inflation, now aligned with the ECB’s 2% goal, effectively marks the end of aggressive inflationary trends seen in earlier quarters. Monetary policy now faces a delicate balance: while inflation is easing, continued elevated services and core inflation leave room for further adjustments. As a result, markets predict that the ECB may hold its policy rate steady in July, with a modest rate cut—possibly 25 basis points—still on the table for September
