Investing.com – Preliminary consumer price inflation in the euro zone in May remained in negative territory falling in line with expectations, underlining concerns over the threat of deflation in the region, official preliminary data showed on Tuesday.
In a report, Eurostat said consumer price inflation fell by a seasonally adjusted 0.1% this month, in line with forecasts, and following a final reading of a 0.2% drop in April.
Looking at the main components of euro area inflation, services was expected to have the highest annual rate in May (1.0%, compared with 0.9% in April), followed by food, alcohol & tobacco (0.8%, stable compared with April), nonenergy industrial goods (0.5%, stable compared with April) and energy (-8.1%, compared with -8.7% in April).
Core CPI, which excludes food, energy, alcohol, and tobacco costs increased by a seasonally adjusted 0.8% in May, also in line with expectations and up slightly from 0.7% a month earlier.
European Central Bank (ECB) president Mario Draghi rolled out fresh stimulus measures earlier in March, including increased asset buying and a deeper cut to deposit rates, in an effort to spur economic activity and boost sluggish inflation.
The ECB will announce their next policy decision on Thursday with analysts largely expecting no additional measures as the euro zone central bank embarks in June on its corporate bond purchase program and the second round of targeted long-term refinancing operations (TLTRO II) designed to provide cheap funds to banks that make loans.
After the report, which was released simultaneous with the unemployment data for the region, EUR/USD was unchanged at 1.1130, while EUR/GBP was at 0.7619 from 0.7616 earlier.
Meanwhile, European stock markets were broadly lower. The EURO STOXX 50 dropped 0.31%, Germany's DAX fell 0.26%, France’s CAC 40 lost 0.28%, while London’s FTSE 100 dropped 0.16%.