Eurozone Inflation May 2017


Eurozone: Inflation eases in May

May 31, 2017

Harmonized inflation in the Eurozone fell in May, according to a flash estimate released by Eurostat on 31 May. Harmonized inflation was 1.4%, down from April’s 1.9%. The result was just below market expectations of a 1.5% reading. May’s reading brought inflation further below the ECB’s target of just under 2.0% just ahead of a monetary policy on 8 June, reducing pressure on the Bank to end its ultra-loose stance.

According to Eurostat, the main contributor to May’s deceleration was a softer rise in energy prices as well as services. Food, alcohol and tobacco prices rose at the same rate as in April. Core inflation fell to 0.9%, down from April’s 1.2%, suggesting that underlying price pressures are soft. Month-on-month price variations and a more detailed set of data will be provided on 16 June.

FocusEconomics Consensus Forecast participants see inflation in the Euro area averaging 1.7% in 2017, which is unchanged from last month’s forecast. For 2018, panelists expect inflation to average 1.5%.

Author: Angela Bouzanis, Senior Economist

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