Euro zone inflationary pressures fell to new record low in May, a forward-looking indicator showed today, suggesting the official measure of inflation will likely fall further below zero in coming months.
The Economic Cycle Institute's Eurozone Inflation Gauge fell to a low of 81.7 in May from 82.3 in April, driven lower by falling inflationary pressures particularly in Germany and Spain.
"With the gauge dropping to a fresh historical low in May, consumer prices in the euro zone are likely to continue their retreat," ECRI said in a report.
Official euro zone inflation fell 0.1 per cent in June, the first time prices have dipped into negative territory in the bloc. Economists expect it to fall further over the summer months before climbing in the later stages of the year.
Inflation is now well below the 2.0 per cent ceiling set by the European Central Bank despite interest rates being at a record low of 1.0 pe rcent. The ECB, which will announce its latest rate decision later today, expects inflation next year to average around 1.0 per cent.
Reuters