By Simone Meier June 30 (Bloomberg) -- European inflation slowed more than economists estimated in June as energy prices receded and companies continued to cut costs. European companies continue to reduce costs and eliminate jobs to shore up earnings battered by the region’s worst recession in six decades. While a drop in the euro against the dollar has made imported goods more expensive, European Central Bank President Jean-Claude Trichet said on June 10 that inflation rates should remain “moderate overall.” Today’s report “reinforces the belief that while the euro- zone economy currently faces significant problems, inflation is not one of them,” said Howard Archer, chief European economist at IHS Global Insight in London. The earlier acceleration in price increases “was very much due to higher energy prices and these appear to have waned in June. Meanwhile, underlying inflationary pressures still seem muted. Crude-oil prices have declined 4 percent this year. Euro-area core inflation, which excludes volatile costs such as energy, held at 0.8 percent in May. Today’s inflation report is an initial estimate and the statistics office will release a breakdown including the core rate for June on July 14. German Inflation The euro was higher against the dollar after today’s inflation data, trading at $1.2251 at 10:30 a.m. in London, up 0.5 percent on the day. In Germany, Europe’s largest economy, inflation slowed more than economists forecast in June, data showed on June 28. German consumer prices rose 0.8 percent from a year earlier after a 1.2 percent gain in the previous month. At the same time, German unemployment fell for a 12th month in June, data showed today, as the economy shows signs of evading the worst of the sovereign debt crisis. Across the euro region, the jobless rate probably held at 10.1 percent in May, the highest in almost 12 years, according to a Bloomberg survey of economists. The statistics office will release the euro-area unemployment report on July 2. Metro AG, the world’s third-largest retailer, said on June 18 that it will close three German wholesale stores after failing to turn them around. The measures will lead to 900 job cuts, the Dusseldorf, Germany-based company said. The ECB said earlier this month that inflation may average around 1.5 percent this year and around 1.6 percent in 2011. The euro-area economy will expand 1 percent in 2010 and around 1.2 percent next year, the Frankfurt-based central bank forecast. --With assistance from Kristian Siedenburg in Budapest. Editors: Jones Hayden, Kevin Costelloe To contact the reporter on this story: Simone Meier in Dublin at smeier@bloombert.net To contact the editor responsible for this story: John Fraher at jfraher@bloomberg.net

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