Falling energy costs in Europe help drive inflation down

European headline inflation has fallen faster than expected due to lower energy costs. EU headline CPI inflation fell from 7% to 6.1% in May as food inflation also slowed. Core inflation (excluding volatile energy and food costs) fell more than expected as it dropped from 5.6% in April to 5.3%. The EU data was not a particular surprise as several of the continent’s biggest economies including Germany, France and Spain had already reported a slowdown in their inflation rates.

Although consumer confidence remains depressed, European consumer expectations for inflation are now starting to fall as well. This is in contrast to the UK where rising food costs are only just beginning to slow. European Central Bank president Christine Lagarde was quick to say further rate hikes are still necessary. However, the better inflation data caused speculation that the ECB will hike by 0.25% at this month’s meeting before pausing. German, French and Spanish government bonds have all risen slightly this week.

For the following stories, please click on this link*

  • US: Positivity in the US following debt ceiling deal can’t hide the generally gloomy outlook
  • UK: Retail inflation remains high and clouds outlook for UK
  • Commodities: Weaker demand from China weighs on raw materials

(*Please note, The contents of this e-shot been prepared for general information only. It does not contain all of the information which an investor may require in order to make an investment decision. If you are unsure whether this is a suitable investment you should speak to your financial adviser. This information is not guaranteed to be correct, complete, or accurate. FE Research is a division of Financial Express Investments Ltd, registration number 03110696, which is authorised and regulated by the Financial Conduct Authority (FRN 209967). For our full disclaimer please visit www.financialexpress.net/uk/disclaimer. Data Sourced from FE Analytics, and Bloomberg Finance LP.)

Recommended Posts