Inflation in the euro zone eased surprisingly significantly. It has fallen to its lowest level since the start of the war in Ukraine. At the same time, the unemployment rate has also fallen sharply.
Inflation in the Eurozone eased more than expected in May. Compared to the previous month, inflation fell from 7.0% to 6.1%, according to preliminary estimates from Eurostat. Core inflation, which excludes volatile energy and food prices, as well as alcohol and tobacco, also fell. It fell back to 5.3% in May and remained at 5.6% in April.
lower energy prices
“Current inflationary pressures will also ease significantly for many commodities, as global material shortages are easing, energy prices have fallen and retail demand has softened,” said KFW chief economist Fritzi Koehler-Geib. Energy Prices – Initially The driver of the current inflation dynamics – fell 1.7% in May in a year.
However, everyday items are particularly expensive in the euro zone: food and drink prices in the euro zone rose 12.5% in May compared to a year earlier. However, the increase was lower than April’s 13.5 percent increase.
hike further possible
“Inflation is heading in the right direction – ie falling. However, with inflation still above the key interest rate, the work of the European monetary authorities is not over yet,” judged Thomas Gitzel, chief economist at VP Bank. The key rate in the euro zone is currently 3.75%. At the Sparkassentag in Hannover, ECB President Christine Lagarde also highlighted the possibility of further increases: “We are determined to bring them back to our medium-term target of 2 percent in the near future.”
Spain’s tallest unemployment rate
At the same time, there is good news from the labor market: the unemployment rate in the euro zone has reached a new low. The unemployment rate fell 0.1 percentage point to 6.5% in April, according to Eurostat. Interest rates have never been lowered since the introduction of the euro. That means unemployment in the currency area has been below 7% for more than a year. According to statistics from the Bureau of Statistics, about 11.09 million people were unemployed in the 20 member states of the euro zone, a total decrease of 203,000 people compared to the same period last year.
Among the 20 countries in the euro area, Spain still has the highest unemployment rate at 12.7%. Germany’s unemployment rate of 2.9 percent is one of the lowest in the currency area, according to Eurostat. The data is based on data from the International Labor Organization (ILO). The German rate is thus considerably lower than the rate reported by the Federal Employment Agency (BA). Germany’s unemployment rate stood at 5.5% in May, the federal agency announced Wednesday.