Euro zone economic growth halved during the April-June period, data from the European Union's statistics office showed on Wednesday. Data also showed that inflation sharply slowed in July even though the unemployment rate dropped to its lowest in 11 years. Eurostat's preliminary flash estimate of gross domestic product growth in the 19 countries sharing the euro showed the economy expanding 0.2 percent quarter-on-quarter, down from 0.4 percent in the previous three months, as expected by economists. Growth in the euro area therefore returned to the anaemic rates seen in the third and fourth quarters of last year. Year-on-year, euro zone GDP growth was 1.1 percent, slowing from 1.2 percent in the January-March period. The slower growth was reflected in decelerating consumer price growth — Eurostat's flash estimate showed year-on-year inflation in July was 1.1 percent, down from 1.3 percent in June, as expected by economists. The headline inflation rate was the lowest reading in 17 months. The slowing inflation rate is likely to further strengthen market expectations that the European Central Bank, which wants to keep inflation below, but close to 2 percent, will further loosen monetary policy in September. Core inflation, which strips out the volatile components of unprocessed food and energy and which the ECB closely looks at in policy decisions, also fell to 1.1 percent in July from 1.3 percent in June. The even more narrow measure excluding also alcohol and tobacco prices that many market economists look at was down to 0.9 percent from 1.1 percent. The slowing price growth comes despite unemployment in the euro zone hitting an 11-year low of 7.5 percent of the workforce in June, Eurostat data showed. Source: Reuters
