Inflation in Europe Hits Lowest Level Since 2022

The inflation rate in Europe has hit its lowest level since February 2022, reinforcing the case for the region's central bank to consider pausing interest rate hikes in the near future.

Preliminary data indicates that the annual headline inflation rate in the bloc decreased to 6.1% in May, down from 7% in April, marking the lowest level since February 2022. Economists surveyed by Reuters had anticipated a May reading of 6.3%. Core inflation, which excludes energy and food prices, also declined more than expected, falling from 5.6% to 5.3%. In May, both Germany and France witnessed a more substantial decline in annual inflation than forecasted, with prices decreasing compared to the previous month. This decline in price growth has now brought the largest economies in the euro area to the lowest point in 12 months. Similarly, Spain and Italy reported a decrease in inflation, according to their respective national reports.

In a speech delivered in Hanover, European Central Bank President Christine Lagarde stated that inflation remains "too high" and is expected to persist at elevated levels for an extended period.