Across the broader European Union, inflation eased to 2.2% in May from 2.4% in April and 2.7% in May 2023.
The lowest annual inflation rates were recorded in Cyprus (0.4%), France (0.6%) and Ireland (1.4%), while the highest were seen in Romania (5.4%), Estonia (4.6%) and Hungary (4.5%). Compared with April, inflation fell in 14 member states, was stable in one, and rose in 12.Services contributed the most to the annual eurozone inflation rate, adding 1.47 percentage points (pp), followed by food, alcohol and tobacco (+0.62 pp), non-energy industrial goods (+0.16 pp), while energy prices dragged by -0.34 pp.
The data comes shortly after the ECB cut its benchmark deposit rate by 25 basis points to 2% earlier this month, marking its first rate cut since 2019. The main refinancing operations rate was lowered to 2.15%, and the marginal lending facility was trimmed to 2.4%.
The move followed a series of rate hikes that had taken the deposit rate as high as 4% by mid-2023, as the ECB battled persistent inflationary pressures across the bloc.
With inflation now appearing to ease, investors are pricing in a pause at the ECB’s July meeting. Some policymakers have echoed that view, calling for a more cautious approach amid lingering uncertainties.
“The ECB should pause further interest rate cuts until at least September,” ECB policymaker Robert Holzmann said. Executive board member Isabel Schnabel also warned that “new shocks” could emerge, even as disinflation remains on track.
