Inflation in the eurozone 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, CNBC reports.
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 in 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 eurozone announcement, with European stocks trading higher and the euro fractionally higher against the U.S. dollar and British pound.
In a speech in Hanover, European Central Bank President Christine Lagarde said inflation was still “too high” and “set to remain so for too long.”
The ECB 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.
“We need to continue our hiking cycle until we are sufficiently confident that inflation is on track to return to our target in a timely manner,” Lagarde said Thursday.
“At the same time, we need to carefully assess the strength of monetary policy transmission to financing conditions, the economy and inflation.”
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.