People at the market for their daily shopping on April 07, 2023 in Bari, Italy. Inflation has eased in Italy but price pressures remain strong.
Donato Fasano | Getty Images News | Getty Images
Inflation in the euro zone eased more than expected in May, with flash figures showing the bloc’s annual headline inflation rate fell to 6.1% in May from 7% in April.
This is the lowest level since February 2022. Economists polled by Reuters had expected a May reading of 6.3%.
Core inflation, excluding energy and food, also fell more than expected, to 5.3% from 5.6%.
Annual inflation in Germany and France dropped more than forecast in May, according to data released on Wednesday, as prices dipped on the previous month. Price rises in the euro area’s largest economies are now at 12-month lows.
National prints also showed inflation easing in Spain and Italy. Markets were little moved immediately after the euro zone announcement, with European stocks trading higher and the euro fractionally higher against the U.S. dollar and British pound. Money markets have priced in two more 25 basis point hikes by the ECB, one in June and another in July or September, according to Reuters.
The European Central Bank meets on June 15 to make its latest monetary policy decision after gradually hauling its benchmark rate from -0.5% a year ago to 3.25% in May — its highest level since November 2008.
The ECB did not give forward guidance following its May meeting, but stressed that underlying price pressures remained strong.
Bundesbank President Joachim Nagel said last week that he expects “several” more hikes in order to control inflation.