Overview

• Headline inflation eased to 1.9% in May from 2.2% in April, its lowest level since September 2024.
• Core inflation, which strips out volatile fuel and food prices, slowed to 2.3% as services price growth dropped to 3.2% and energy inflation turned negative.
• The ECB has implemented seven rate cuts since June 2024 and markets are fully pricing in another 25 basis-point reduction on June 5.
• Threatened US tariffs on EU steel and aluminium imports heighten risks to the eurozone’s future price stability.
• Euro area GDP grew by just 0.3% in the first quarter, underscoring the region’s subdued expansion even as inflation eases.