Euro area inflation – Below the ECB target for the time being
The inflation rate in the euro area fell surprisingly sharply in May and, at 1.9%, is now just below the ECB's target of two percent.
Commerzbank Economic Research
06/03/2025
Vanishing Easter effect causes inflation to drop
According to preliminary data from Eurostat, the inflation rate fell to 1.9% in May, after 2.2% in the previous month, and was therefore lower than the consensus (2.0%). The inflation rate excluding energy, food and beverages (core rate) also fell from 2.7% to 2.3%. This was also below consensus expectations. As expected, the surprising rise in the core rate in April was not permanent.
The fall in the inflation rate is mainly due to the inflation rate for services. This fell noticeably from 4.0% to 3.2% in May, following a surprisingly sharp rise in April, partly due to expensive flight ticket prices around Easter. The only blemish was the rise in the inflation rate for food and beverages to 3.3%.
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