May’s fall in euro-zone HICP inflation from 0.7% to 0.5% left it at its joint weakest rate since October 2009 and far beneath the ECB’s 2% price stability ceiling. There is no sign of inflationary pressure in the pipeline: there is plenty of spare capacity in the economy; producer price inflation was -1.2% in April; survey measures of inflation expectations have continued to fall; and the strong euro is weighing on import prices. Accordingly, the ECB is under pressure to provide bold policy support at tomorrow’s policy meeting to address the growing risks of deflation in the single currency area.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to gain:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services