What's going on?

The rate at which the prices of goods and services increased in the eurozone � a.k.a. inflation � rose by slightly more than expected in June, but the bloc�s central bank shouldn�t celebrate just yet�

What does this mean?

June�s eurozone inflation was 0.3% compared to the same month last year � a pickup from May�s four-year low. That suggests growth might be returning, which should be good news for the economy. But there was cause for concern: price rises in the services industry � bars, restaurants, and so on � lagged those of food, tobacco, and alcohol. That�s worrying because services make up over half the eurozone economy, and �supply� � space, reservations, and the like � will be tight as the bloc tries to reopen safely. Economists will be watching closely, then, to see whether a much-hoped-for increase in demand drives future price hikes.

Why should I care?

The big picture: Low inflation ain�t so bad.

As far as the European Central Bank (ECB) is concerned, inflation at any level is better than deflation, which could send the eurozone on a downward spiral from which it may never recover. But it�s not out of the woods yet: inflation�s been below the ECB�s previous 2% target for seven years now, and the bank doesn�t expect it to rise much above zero until next year, as coronavirus leaves lasting effects on unemployment and, in turn, consumption.


Zooming out: Low inflation really ain�t so bad.

People are drawn to investing when inflation is high because it helps protect the value of their money from being eroded over time. That�s no truer than in Zimbabwe, where inflation hit 786% in May � its highest in ten years � and locals fled to the domestic stock market in their droves to protect their cash. And on Sunday � seemingly with no explanation � the government shut the country�s stock exchange down, leaving folks unable to get their money back out.