Euro-Area Inflation Hits 2% Level Amid Boost From Oil Prices

(Bloomberg) -- Euro-area inflation hit the 2 percent level in June for the first time in more than a year, supported by higher oil prices.

The pickup in rate of price growth to just above the European Central Bank's target was in line with the median estimate of economists surveyed by Bloomberg. The core measure, which excludes volatile components such as food and energy slowed to 1 percent, while services inflation cooled to 1.3 percent.

While the acceleration will be welcomed by the ECB -- inflation was just 1.3 percent at the start of the year -- policy makers are really looking for a solid pickup that won't require monetary support.

They have expressed confidence that inflation is converging sustainably toward their goal of just under 2 percent and plan to wind down the ECB's bond-buying program at the end of this year.

Much of the ECB's confidence is linked to employment, which has benefited from continued economic growth. “Domestic cost pressures are strengthening amid high levels of capacity utilization, tightening labor markets and rising wages,” ECB President Mario Draghi said this month.

--With assistance from Barbara Sladkowska and Andre Tartar.

To contact the reporter on this story: Fergal O'Brien in Zurich at fobrien@bloomberg.net

To contact the editors responsible for this story: Craig Stirling at cstirling1@bloomberg.net, Zoe Schneeweiss, Paul Gordon

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