Euro zone inflation eased by more than expected in May, reflecting dips in Germany and Spain among others and supporting European Central Bank policymakers wanting only slow adjustments to rates and monetary stimulus. Ciara Lee reports.
A fall was expected But consumer prices in the euro zone slowed more than expected year-on-year in May. Partly down to lower increases in energy and food costs - inflation in the 19 countries sharing the euro slowed to 1.4 percent from 1.9 percent in April. The news supports ECB chief Mario Draghi's argument that monetary policy should remain ultra-loose in the bloc. He wants to keep inflation below, but close to 2 percent over the medium term. (SOUNDBITE) (English) JASPER LAWLER, SENIOR MARKET ANALYST, LONDON CAPITAL GROUP, SAYING: "This does support the case that the ECB has been making is that actually underlying inflation in the euro zone is still soft. It's not deflationary as was once the fear. But it's really not it's not quite strong it's not consistently at their target. And so they've got room to keep this very accommodative policy for a few more months perhaps taking them past German elections in September." Businesses across the euro zone maintained April's blistering growth rate this month. And unemployment in the bloc fell to an eight-year low of 9.3 percent. Retail figures in Germany though fell unexpectedly in April. Although some say that's no major concern. (SOUNDBITE) (English) JASPER LAWLER, SENIOR MARKET ANALYST, LONDON CAPITAL GROUP, SAYING: "It would actually be no bad thing if some of the growth was coming from other areas like manufacturing and build up other areas of services rather than the purely consumer led recovery that we've seen so far." March retail sales in Greece fell one percent compared to the same month a year ago Renewed jitters over Athens and its bailout aren't helping. One ECB board member saying that Europe must stop stalling and agree on debt relief measures for Greece to revive the only euro zone economy still in recession.