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2w ago

Eurozone Inflation Falls to 1.9%, Under ECB’s 2% Threshold

Core inflation easing alongside softer service price growth has prompted the ECB to plan a rate reduction on June 5.

L'inflation a ralenti plus que prévu en mai dans la zone euro à 1,9% sur un an, atteignant son plus bas niveau depuis septembre
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Évolution de l'inflation en zone euro depuis 1997

Overview

  • Eurostat data show headline inflation dipped to 1.9% year-on-year in May, its lowest reading since September and below the ECB’s 2% goal.
  • Underlying inflation, which strips out energy and food, slowed to 2.3% from 2.7% in April, marking the sharpest moderation since summer 2023.
  • Service sector price growth cooled to 3.2% year-on-year, while food inflation accelerated to 3.3%, up 0.3 percentage point from April.
  • Economists at Capital Economics project a 25-basis-point cut to the ECB’s main rate on June 5 and see room for further easing by July.
  • US import tariffs have suppressed commodity costs and strengthened the euro, prompting the European Commission to downgrade its GDP growth forecasts for 2025 and 2026.