European inflation slowed more than economists forecast this month, cooling to the least in more than a year as the economic slump showed signs of deepening. The inflation rate in the 17-nation euro area fell to 2.4 per cent from 2.6 per cent in April, the EU’s statistics office in Luxembourg said.
Another report showed German unemployment fell this month.
Crude oil prices have dropped about 16 per cent in the past two months, easing inflation pressures and giving the ECB more room to focus on ways to bolster the economy after Greece’s elections raised investor concerns about a euro break-up.
The single currency slumped to a near two-year low versus the dollar this week.
“The persistent economic downturn in the euro zone is likely to keep underlying inflation low for a protracted period,” said Martin van Vliet, an economist at ING Bank in Amsterdam. “Although the ECB will likely keep interest rates on hold next week” President Mario Draghi “could open the door to further monetary easing later this year”. – (Bloomberg)
