Eurozone inflation moderated in May to 6.1%, at its lowest since February 2022

June 1 () –

The year-on-year inflation rate in the euro area slowed by one in May to 6.1%, nine tenths below the price rise registered in April and its lowest level since February 2022, when Russia began the invasion of Ukraine, according to data published by Eurostat.

In the month of May, energy registered a year-on-year price drop of 1.7%, after the rise of 2.4% in the previous month, while the price of food eased its rise to 9.6% since 10 % of April.

In the case of services, prices rose 5% year-on-year in May, two tenths less than in April, and non-energy industrial goods became more expensive by 5.8%, four tenths less than the previous month.

Excluding the impact of energy from the calculation, the year-on-year rate of inflation in May stood at 7%, compared with 7.4% in April, while also excluding the impact of the price of food, alcohol and tobacco, the core inflation rate eased to 5.3% from 5.6% the previous month, thus completing two consecutive months of moderation.

Among the euro countries, the smallest price increases were observed in Luxembourg (2%), Belgium (2.7%) and Spain (2.9%), while at the opposite extreme, the highest inflation rates corresponded to to Latvia and Slovakia (12.3% each), Estonia (11.2%) and Lithuania (10.7%).

Among the rest of the main euro area economies, Germany moderated the rise in prices in May to 6.3% from 7.6%, while in France harmonized inflation was 6%, nine tenths less than in April , and in Italy it moderated to 8.1% from 8.7%.

FINAL STRAIGHT OF INCREASES IN RATE.

In an interview with RNE, collected by Europa Press, the vice president of the European Central Bank (ECB), Luis de Guindos, has indicated that the current path of interest rate rises, which began in July 2022 and has increased by 375 basis points the price of money, is approaching the “final stretch”, adding that an increase of 25 basis points, as implemented in the last meeting of the Governing Council, is the “new norm”.

“There is a perception that a large part of the path of rate increases has been carried out and the last part remains, the final stretch,” said the Spanish economist, reiterating that the amount of the increases in this final stretch will depend on incoming data, as well as new macroeconomic projections and the transmission of monetary policy.

In this sense, the vice-president of the ECB recalled that at the last meeting of the entity’s Governing Council it was agreed to moderate the pace of rate hikes to 25 basis points. “I think that this is the new norm”, he has anticipated.

In any case, for Guindos the situation of very low rates, even negative ones, of previous years is something that corresponds to the past and that was not normal, for which reason he has predicted that, at least in the next three or four years, the rates will be at slightly positive levels.

Likewise, he has once again highlighted that the inflation data published this week in several euro area countries, including Spain, “are positive” and shows that inflation is falling, although he has warned that in the case of the rate underlying will be a more limited reduction and underlined that “we are still very far from the inflation target”.