Eurozone consumer price index-led inflation continued to remain in red despite a light of hope in the area’s largest economy. Consumer prices fell for the third month in four months’ time, official data showed Tuesday.
However, the outlook remains positive for the 19-Eurozone countries in the months ahead owing to the recent spike in global crude oil prices, which is likely to refrain the European Central Bank from announcing more stimulus measures at its meeting scheduled on Thursday.
Inflation in the year to May was -0.1 percent, slightly up from the previous month's rate of -0.2 percent, data agency Eurostat showed on Tuesday. The sharp fall in energy and raw material prices has weighed on consumer prices.
The core-inflation, excluding energy costs and other typically volatile items like food, tobacco and alcohol rose marginally to 0.8 percent in the year to May compared to previous month’s rate of 0.7 percent.
Meanwhile, less is expected at the ECB policy meeting this week since the more recent stimulus efforts are still working their way through the economy, reports said.
“Unless oil prices drop back sharply, headline CPI inflation will undoubtedly climb over the coming months as negative energy effects finally fade,” said Jonathan Loynes, Chief European Economist, Capital Economics.
However, it is encouraging to note that majority of the improvement have spurred from those economies which held the flag during the start of Eurozone crisis over the past few years. In fact, countries like Spain are evidence to that, where the number of unemployed has fallen by more than 600,000 over the past year to 4.6 million, a reduction that has taken the jobless rate down to 20.1 percent from 22.9 percent.
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