Eurozone price inflation falls in May

FE Team | Published: June 17, 2014 00:00:00 | Updated: November 30, 2026 06:01:00

BRUSSELS, June 16 (Reuters): A further slowdown in eurozone inflation in May was confirmed on Monday, as the cost of telecommunication and food kept prices low, confirming a problem that the European Central Bank (ECB) recently sought to stem.
Consumer prices in 18 countries using the euro rose by 0.5 per cent on the year in May, keeping them in the 'danger zone' of below 1.0 per cent, the EU's statistics office Eurostat data said.
Prices fell by 0.1 per cent on the month in May, with the cost of services down by 0.2 per cent when compared with April.
It confirms a problematic pricing trend that weighs on debt-strapped countries and recently prompted the European Central Bank to act.
In June, the ECB became the first major central bank to introduce negative deposit rates - charging banks to park funds overnight. It also launched ultra-cheap four-year loans to banks in order to boost lending to companies.
ECB President Mario Draghi said he was ready to act again, leaving investors guessing as to when he could start buying assets such as bonds - a measure known as quantitative easing.
Executive Board member Benoit Coeure said on Friday there was no need to launch large-scale asset purchases for now because the eurozone is not seeing deflation.
There are, however, three eurozone countries experiencing price deflation.
Consumer prices in Greece were down in May by 2.1 per cent compared to a year earlier after a 1.6 per cent drop in April. The annual rate of inflation in Portugal was -0.3 per cent in May. In Cyprus, it stood at -0.1 per cent.
With 12-month average annual inflation rate in the eurozone at 0.9 per cent in May, only Luxembourg, Austria, Slovenia and Finland had an annual inflation rate of 1 per cent or more.
Core inflation, excluding energy, food, alcohol and tobacco, fell to 0.7 per cent in May from 1 per cent in April. Energy prices were flat on the year.