Analysts at TD Securities note that Eurozone’s inflation figures surprised to the downside in May, with headline inflation slipping to 1.2% y/y and core inflation at just 0.8% y/y.
Key Quotes
“Within core inflation, core goods inflation rose a tick to 0.3% y/y, while services prices fell very sharply to 1.1% y/y. These figures pose a real challenge to the ECB’s fairly optimistic March projections, and notably won’t be included in their forecasts released later this week.”
“It’s worth remembering that April’s figures were artificially inflated by Easter timing effects, so May’s data reflects the truer underlying price picture. The unemployment rate for April improved to 7.6%, its best reading since 2008.”
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