Eurozone inflation slowed to below 2 per cent in June, easing concerns that the bloc’s economic reopening will fuel price growth.
However, economists expect pressures to increase again in the second half of the year.
Consumer prices rose by 1.9 per cent in June from a year earlier, down from a more than two-year high of 2 per cent in May.
Core inflation, a less volatile measure that excludes volatile items such as food and energy, slowed to 0.9 per cent, according to a flash reading from Eurostat.
“Looking at the main components of euro-area inflation, energy is expected to have the highest annual rate in June [12.5 per cent, compared with 13.1 per cent in May], followed by non-energy industrial goods [1.2 per cent, compared with 0.7 per cent in May],” Eurostat said on Wednesday.
Europe’s recovery is gaining momentum as the number of Covid-19 infections declines, with shops, restaurants and cafes reopening and summer travel resuming.
“National data shows that the decline in eurozone inflation was largely because of a fall in Germany, from 2.4 per cent in May to 2.1 per cent in June, which was in turn due to services inflation declining from 2.2 per cent to 1.6 per cent,” said Andrew Kenningham, chief Europe economist at Capital Economics.
“We don’t yet have much detail for Germany either, but the fall in services inflation may reflect changes in the timing of holidays and is, in any case, unlikely to be the start of a downward trend.”
Among the other large economies, headline inflation in June was either stable, such as in Spain, or slightly higher, such as in France and Italy.
But economists expect upward pressure on prices to return in the summer when the recovery will be at full speed, led by higher inflation in Germany.
“We think it will drop back at the beginning of 2022 and remain below the European Central Bank’s target beyond that,” said Mr Kenningham.
The majority of ECB policymakers say the price pick-up is temporary, with high unemployment and a weak medium-term outlook justifying their loose monetary stimulus. The institution has pledged to keep buying bonds at an elevated pace over the summer.
Joshua Mahony, senior market analyst at global online trader IG, said the decline in eurozone consumer price inflation should provide some relief for markets, given the impact it could have upon ECB thinking.
However, European stocks were “on the back foot” in early trading on Wednesday.
“On a day dominated by economic data, eurozone inflation has provided a welcome sign of easing pressure on the central banks. While the 0.1 per cent decline in inflation may be marginal in nature, this represents the end of a five-month period of consecutive price growth that swung CPI from minus 0.3 per cent to 2 per cent,” said Mr Mahoney.
“Coming at a time where we have seen a focus on central bank thinking in response to above-target inflation, the fact that eurozone CPI is back below the 1.9 per cent target should ensure a relatively dovish stance from the ECB.”
The specs: 2018 Nissan 370Z Nismo
The specs: 2018 Nissan 370Z Nismo
Price, base / as tested: Dh182,178
Engine: 3.7-litre V6
Power: 350hp @ 7,400rpm
Torque: 374Nm @ 5,200rpm
Transmission: Seven-speed automatic
Fuel consumption, combined: 10.5L / 100km
Tips to keep your car cool
- Place a sun reflector in your windshield when not driving
- Park in shaded or covered areas
- Add tint to windows
- Wrap your car to change the exterior colour
- Pick light interiors - choose colours such as beige and cream for seats and dashboard furniture
- Avoid leather interiors as these absorb more heat
Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
THE BIO
Favourite author - Paulo Coelho
Favourite holiday destination - Cuba
New York Times or Jordan Times? NYT is a school and JT was my practice field
Role model - My Grandfather
Dream interviewee - Che Guevara
How to get there
Emirates (www.emirates.com) flies directly to Hanoi, Vietnam, with fares starting from around Dh2,725 return, while Etihad (www.etihad.com) fares cost about Dh2,213 return with a stop. Chuong is 25 kilometres south of Hanoi.
UJDA CHAMAN
Produced: Panorama Studios International
Directed: Abhishek Pathak
Cast: Sunny Singh, Maanvi Gagroo, Grusha Kapoor, Saurabh Shukla
Rating: 3.5 /5 stars
The biog
Favourite colour: Brown
Favourite Movie: Resident Evil
Hobbies: Painting, Cooking, Imitating Voices
Favourite food: Pizza
Trivia: Was the voice of three characters in the Emirati animation, Shaabiyat Al Cartoon
Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
Off-roading in the UAE: How to checklist
