Eurozone inflation fell unexpectedly to 1.9% in May, marking its lowest level since September 2024 and dipping below the European Central Bank's 2% target, according to data released Tuesday by the EU's statistics agency. The slowdown – driven largely by cooling prices in the services sector – exceeded analysts' forecasts and signals shifting economic headwinds for the 20-nation currency bloc.
Key Drivers and Implications
The decline from April's 2.2% rate reflects moderating consumer demand amid tighter monetary policies. While energy prices stabilized, services inflation eased to 3.9% from 4.1% month-over-month. The development comes as Asian investors closely monitor European economic trends for potential impacts on trade flows and central bank policy coordination.
