Eurozone inflation inches higher as confidence hit

INFLATION levels, for the eurozone as a whole inched higher in May in tandem with a decline in general economic confidence.

The EU’s central statistics office – Eurostat – forecast, yesterday, that the rate of inflation across the 16 of the 27 EU member states which have the euro as their national currency rose to 1.6% in May. This would be in line with the trend in recent months, which has seen a consistent monthly rise of 0.1%.

The rate went from 1.4% in March to 1.5% in April.

However, some European economists had expected a slightly steeper rise in May to 1.7%.

Analysts also called it wrong, in relation to the latest monthly eurozone confidence barometer, the Economic Sentiment Indicator (ESI).

May’s edition of the survey – which was published by the European Commission yesterday – showed a fall from 100.6 points in April to a reading of 98.4 points for May. Economists had expected no change, even though the wider EU member state indicator fell by nearly two points (to 100 points) over the same timeframe.

According to the latest Eurozone ESI and its consumer confidence indicator, European consumers – during May – “were worried about the general economic outlook, although their assessment of the labour market continued to improve”.

“The sharpest drops were reported in southern Europe and the UK. Confidence declined among German and French consumers as well, while Dutch consumers were more optimistic,” it added.

The survey said that confidence in financial services – although not included in the ESI – fell by one point in the EU and by four points across the smallereurozone area, compared with the previous month.