Euro zone price inflation stays low but stable in June

BRUSSELS (Reuters) - Euro zone inflation in June was flat, official data showed on Monday, easing immediate pressure on the European Central Bank to act again soon to tackle slow price rises.

The year-on-year June inflation rate in the 18 countries sharing the euro stood at 0.5 percent for the second month in a row, the European Union's statistics office Eurostat said.

It was the ninth straight month that inflation remained within what European Central Bank President Mario Draghi has called a "danger zone" of below 1 percent.

Prices of food, alcohol and tobacco fell by 0.2 percent in June, while the prices of services rose by 1.3 percent and energy costs were up by 0.1 percent year-on-year, Eurostat data showed.

Core annual inflation - excluding energy, food, alcohol and tobacco - rose by 0.8 percent year-on-year in June after a 0.7 percent increase in May.

Earlier this month, the ECB reacted to vanishing price inflation with a raft of measures, including cutting the deposit rate below zero and offering long-term loans to banks aimed at boosting lending to business.

The ECB insists that there is no acute risk of outright deflation in the 9.6 trillion euro economy. Three countries, however, experienced deflation in May.

Analysts polled by Reuters said the bank has probably done enough for now. Some, however, argue that a quantitative easing program to 'print money' will be required for any lasting impact.

The ECB lowered its forecast for euro zone inflation in June, predicting that it would reach 1.4 percent in 2016 - far off its target of below but close to 2 percent.

The ECB's Governing Council meets again on Thursday.

(Reporting by Martin Santa; editing by John O'Donnell)

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