Inflation in the Eurozone drops more sharply than expected

Inflation in the Eurozone fell more sharply than expected in May. As reported by the Eurostat statistical office in Luxembourg, the annual rate declined from seven per cent the previous month to 6.1 per cent.

Economists had expected a rate of 6.3 per cent after a modest increase in April. Last year, inflation reached double figures on occasions as a consequence of the war in Ukraine. Compared with the previous month, however, price levels remained static.

Foodstuffs and luxury foods generated somewhat less price buoyancy in May, even if the rise was still steep at 12.5 per cent. Industrially manufactured goods and services also increased less sharply than in April, with energy prices even falling by 1.7 per cent compared with the same month in the previous year.

The inflation target of the European Central Bank (ECB) of two per cent in the medium term continues to be exceeded. The issue bank has been trying to stave off price increases with higher base rates since last summer, and another increase is generally expected at its next meeting.