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Eurozone inflation falls below 2% target/ Interest rate cut expected

2025-06-03 18:54:00, Ekonomi CNA

Eurozone inflation falls below 2% target/ Interest rate cut expected

Eurozone inflation fell more than expected in May, bolstering expectations that the European Central Bank (ECB) will announce another interest rate cut at its meeting on Thursday.

Annual consumer price inflation slowed to 1.9% in May, from 2.2% in April, according to a flash estimate from Eurostat. The figure came in below economists' forecast of 2% and marked the first time inflation has fallen below the ECB's 2% target since September 2024.

The decline in core inflation suggests that business uncertainty, partly driven by renewed global trade tensions and weak consumer demand, is weighing on pricing power across sectors.

Core inflation, which excludes volatile food and energy prices, also showed signs of easing. It slowed to 2.4% in May, from 2.7% in April, falling below expectations of 2.5%. On a monthly basis, core prices rose just 0.1%.

Among the main components of inflation, food, alcohol and tobacco remained the strongest driver, rising 3.3% year-on-year, from 3.0% in April. Services inflation, which had been particularly stable, fell sharply from 4.0% to 3.2%, contributing significantly to the broader slowdown.

Non-energy industrial goods recorded a steady annual growth of 0.6%, while energy prices continued their downward trajectory, falling by 3.6% compared to a year earlier.

On a monthly basis, headline inflation was unchanged, following a 0.6% increase in April, signaling a clear slowdown in momentum.

The highest annual rates were recorded in Estonia (4.6%), Slovakia and Croatia (both 4.3%). France recorded the lowest inflation, at just 0.6%, suggesting a marked divergence in price pressures among eurozone members./CNA





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