July 31, 2018 / 9:14 AM / 3 months ago

Euro zone economic growth slows in Q2, inflation accelerates

BRUSSELS, July 31 (Reuters) - The euro zone economy grew more slowly than expected in the second quarter, preliminary data showed on Tuesday, but headline and core inflation accelerated with unemployment stabilising at a lower level.

The European Union’s statistics office Eurostat estimated that gross domestic product in the 19 countries sharing the euro expanded 0.3 percent quarter-on-quarter in the April-June period and was 2.1 percent higher against the same period of 2017.

Economists polled by Reuters had expected a 0.4 percent quarterly expansion and a 2.2 percent year-on-year rise.

Headline consumer inflation accelerated to 2.1 percent year-on-year in July from 2.0 percent in June, mainly because of a spike in the cost of energy.

Core inflation, which excludes energy costs as well as unprocessed food and which the European Central Bank looks at in policy decisions, also rose to 1.3 percent year-on-year from 1.2 percent in June, beating economists expectations.

An even narrower core inflation measure that economists pay attention to, which excludes also the costs of alcohol and tobacco, also rose to 1.1 percent from 0.9 percent in July — again, above expectations.

The ECB wants to keep headline inflation below, but close to, 2 percent over the medium term.

Separately, Eurostat said unemployment in the euro zone was at 8.3 percent in June, unchanged from a downwardly revised 8.3 percent in May. (Reporting By Jan Strupczewski Editing by Alastair Macdonald)

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