Euro zone inflation slows more than expected in May

World
Europe

Euro zone inflation slowed more than expected in May, a flash estimate showed on Tuesday, with the core measure also decelerating sharply despite the European Central Bank's efforts to speed up price growth.

The European Union's statistics office Eurostat said consumer price growth in the 19 countries sharing the euro slowed to 1.2 percent year-on-year in May from 1.7 percent in April, below economists' expectations of 1.3 percent.

The ECB wants to keep inflation below, but close to 2 percent over the medium term and has kept its main refinancing rate at zero and the deposit rate at -0.4 percent since Match 2016 to stimulate credit to the economy and faster inflation.

VCG Photo

The ECB will discuss policy next Thursday, and ECB policymaker Olli Rehn said at the end of May that the bank was ready to reintroduce monetary support measures if required, amid market concern over the euro zone's economic slowdown.

Eurostat data showed that unprocessed food price growth halved in May from April to 0.4 percent year-on-year while energy price growth slowed to 3.8 percent year-on-year form 5.3 percent in April.

The core inflation measure the ECB looks at in policy decisions that excludes these volatile components was 1.0 percent in May against 1.4 percent in April.

The slower price growth comes despite the euro zone recording its lowest unemployment rate in 10 years, which in April fell to 7.6 percent of the workforce from 7.7 percent in March — a rate unmatched since August 2008.

Eurostat said that 12.529 million people in the euro zone were unemployed in April 2019, 64,000 fewer than in March and 1.147 million fewer than a year earlier.

Source(s): Reuters