Inflation returns to eurozone in May

Inflation in eurozone turns positive in May with rising food costs, reviving hopes of economic recovery in Europe

Photo by: Reuters
Photo by: Reuters

Updated Jul 28, 2015

The annual inflation rate in the eurozone rose to 0.3 percent in May, up from 0 percent in April, turning positive after having fallen or remained stagnant for five months. It comes on the back of higher food costs and decreasing impact of cheaper energy.

Prices for services rose by 1.3 percent while food and drink prices increased by 1.2 percent, according to official data announced on Wednesday by the EU’s statistics agency Eurostat. Energy prices were down 5 percent in May from a year earlier, compared with a year on year fall of 5.8 percent in April.

The data was in line with expectations and unchanged from preliminary estimates.

The latest inflation figure has revived hopes of an economic recovery in Europe and is likely to be welcomed by European Central Bank (ECB), which has sought to avoid deflation in recent months.

In March, the ECB began a €1.1 trillion ($1.24 trillion) bond buying programme in efforts to stimulate the eurozone economy. The return of inflation is likely to raise hopes that the programme is working.

Policymakers became concerned about deflation last year, fearing that if price falls became entrenched purchases and investment would be delayed in expectation of further decreases.

TRTWorld and agencies