Euro Area Inflation (HICP, ann. var. %, eop)

Inflation in Euro Area

Inflation falls more than expected in May

Harmonized inflation fell in May more than market had expected, decreasing to 6.1% from April’s 7.0% reading. It represents the lowest inflation since February 2022, when Russia invaded Ukraine. As a result, inflation moved closer to the European Central Bank’s target rate of 2.0%.

May’s result was due to prices for energy swinging from an increase in April to a year-on-year decrease in May, as well as to softer increases in prices for services, non-energy industrial goods and food, alcohol and tobacco. Meanwhile, the annual rate of core inflation—which excludes volatile energy and unprocessed foods prices—declined to 6.9% in May from April’s 7.3%.

On a monthly basis, harmonized consumer prices were unchanged in May, decelerating from April’s 0.6% rise.

Commenting on the outlook, Bert Colijn, senior economist at ING, stated:

“The May inflation data brings some relief on the inflation front, while economic data has disappointed and monetary developments show fast transmission from previous rate hikes. Those will no doubt embolden the doves in the ECB’s governing council, but concerns around higher wage growth bolster the hawkish view.”